Hints: For problem 1, refer to chapter 1 supplement (Decision Analysis). For problem 2, refer to chapter 15 (Resource Planning), especially the MRP process. You basically need to construct product structure diagrams and then a MRP matrix. You don't have to submit the diagrams or matrix to me, I only need the answer. But if you have questions, you can always send them to me before the deadline. I would be happy to look at it. Thanks.
1. Landloc, a real estate development firm, is considering several alternative development projects. These include building and leasing an office building, purchasing a parcel of land and building a parking lot, buying and leasing a warehouse, building a shopping mall, and building and selling condominiums. The financial success of these projects depends on interest rate movement in the next five years. The various development projects and their five-year financial return ($ million) given that interest rates will decline, remain stable, or increase are shown in the following pay-off table.
|
|
Interest Rates
|
|
Project
|
Decline
|
Stable
|
Increase
|
|
Office building
|
0.5
|
1.7
|
4.5
|
|
Parking lot
|
1.5
|
1.9
|
2.4
|
|
Warehouse
|
1.7
|
1.4
|
1.0
|
|
Shopping mall
|
0.7
|
2.4
|
3.6
|
|
Condominiums
|
3.2
|
1.5
|
0.6
|
Determine the best investment using the following decision criterion.
a. Maximax
b. Maximin
c. Equal likelihood
2. Product A is assembled from two units of S1 and three units of S2. S1 is made of one unit of C1, four units of C2, and one unit of C3. S2 is made of three units of C2 and two units of C3.
a. How many C3's are needed to fill an order for 100 A's?
b. Assume no inventory on hand, products take one day to assemble, subassemblies take two days and components take three days. When should an order be released for C3 if the 100 A's are needed by day 7?