it A manager is trying to decide whether to buy one machine or two. If only one is purchased and…

it A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand proves to be excessive, the second machine can be purchased later. Some sales will be lost, however, because the lead time for producing this type of machine is six months. In addition, the cost per machine will be lower if both are purchased at the same time. The probability of low demand is estimated to be 0.30. The after-tax net present value of the benefits from purchasing the two machines together is $70,000 If demand is low and $160,000 if demand is high. If one machine is purchased and demand is low, the net present value is $110.000. If demand is high, the manager has three options. Doing nothing has a net present value of $120,000; subcontracting. $160.000; and buying the second machine, S130,000 . 3. Choose the correct decision tree for this problem. Note that each payoff is given in thousands of dollars. MA ??. Low demand 110 Do nothing Low demand 110 Do nothing 120 a Buy 1 machine Buy 2 machines 120 Q -160 160 0.30 High demand 0.70 Low demand 0.30 Subcontract Buy 2 70 machines 11 Buy 2 machines 130 0.30 High demnand 0.70 Low dernand 0.30 High demand 0.70 Subcontract Buy 1 70 machine 130 Buy 1 High demand 160 machine 160 0.70 11 C. D 11 a a 11 Low demand Low demand 110 70 Do nothing 120 0.30 Do nothing Buy 1 machine 1 High demand 120 160 Subcontract Buy 2 110 machines Subcontract Buy 1 machine 1 Buy 2 machines High demand 0.70 160 Low demand 130 Buy 2 -130 Buy 2 machines 70 machines High demand Low dernand 0.30 160 b. How many machines should the company buy initially? What is the expected payoff for this alternative? Best decision is to buy machine(s) and its expected payoff is $. (Enter your responses as integers.) 10 Enter your answer in the edit fields and then click Check Answer ? All parts showing Clear All Check Answer
Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
error: Content is protected !!