1. (TCOs A, B, C, D, E, F, G, and H)
Bonnie's Ice Cream Treats recently celebrated its 5th anniversary as a specialty ice cream store in Phoenix, AZ..
The company was founded by Bonnie who worked for many years at Baskin Robbins. Bonnie is more of a people person and is always looking for the next new business venture to take on. Admittedly, Bonnie had no experience in running a business when she decided to go out on her own and enlisted the help of her long-time friend, Clyde. Clyde has spent his career working for larger corporations in finance and had no experience in ice cream stores, but was looking for a change.
Over the 5 years since the company's founding, the business struggled at first but slowly grew over the last two years when Bonnie began marketing on the Internet. The more Internet marketing that the business has done, the more the business has grown. Bonnie's Ice Cream Treats currently has six employees and two managers that run the store in Phoenix 7 days a week.
Bonnie is really interested in expanding the business to other cities in Arizona, believing that "there are only so many ice cream eaters in Phoenix." She feels that if they've grown quickly the last two years, then they should continue to focus on growing the business. Clyde, on the other hand, feels that expansion will put the company at risk as it takes time to develop a decent client base at a new location. They opened a second location in Phoenix several years back across town but eventually closed it when it didn't generate enough revenue to cover expenses. He's worried the expansion may bankrupt the company.
Even though the two are business partners, Bonnie is the president and Clyde the vice president. Bonnie asked Clyde to evaluate three options to further expand the business. From Bonnie's perspective, she has concluded that three objectives are important in this decision. First, is to find a city with strong projected ice cream sales, low start-up costs, and a city that is in a reasonable distance from Phoenix as she and Clyde would be spending a lot of time in the new location at first and they both have families with young children. Bonnie feels that the driving distance is twice as important as each of the other two objectives.
Here is the summary of Simmons' research for three locations in AZ.
1. Yuma, AZ: Projected ice cream sales: $10000/month; Start-up costs: $80000; Driving Distance: 184 miles
2. Flagstaff, AZ: Projected ice cream sales: $7000/month; Start-up costs: $60000; Driving Distance: 144 miles
3. Tucson, AZ: Projected ice cream sales: $5000/month; Start-up costs: $100000; Driving Distance: 116 miles
1. Describe the general nature of the problem. b) What is the decision to be made?
2. What event triggered the situation?
3. Identify at least three constraints on the decision situation?
4. Define the three fundamental objectives.
5. Identify the three alternatives.
6. Using a consequence table, scoring model with proportional scores (100 - 0) and weighted scoring model, evaluate the alternatives based upon weighted objectives. Show all three tables for full credit (you can separate items in your tables with spaces).
7. identify the decision-making styles for Bonnie and Clyde. b) Identify the risk attitudes for Bonnie and Clyde.
8. identify at least 2 biases are in play here that may impact the effectiveness of the decision?
9. Identify two potential uncertainties for this decision. b). For each uncertainty, identify 2 possible outcomes, their likelihood and consequences.
10. Based upon your Weighted Scoring Model, which location should be select? b). Describe at least two linked decisions that should be considered.