JGT - Task 4 - Class Notes | Business Management

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JGT-Task 4

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Decision AnalysistoolsThe case study involves a decision tree and the decisionmaking process for1) opening a new stand-alone store or2) opening a mall store in two alternative scenariosa) afavorable market or b) unfavorable market or 3) deciding not toopen any store..

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CONTINUED.State of Nature 1: In the stand-alone store profitexpected is $700,000 if market is favorable andloss of $400,000 if market is unfavorable.State of Nature 2: In the mall store profitanticipated is around 3lac USD in case of favorablemarket and loss of fifty thousand USD in case ofunfavorable market.State of Nature 3: If no store is opened there wouldno profit or loss.

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Decidingon Buying a MarketResearchSurveyTo decide on the options the company has todecide on whether or not to go in for purchase of amarket research survey which involves a layout of$20,000 (decision tree-top portion) and mightmake either a positive or a negative repercussionon the market conditions.Ano purchase situation would have no marketimpact.

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Decision based on POM forWindowsTheprevious dataif used with the Production &Operation Management Tool for Windows and if thehighest EMV or the Expected Monetary Value factoris selected, gives the following results:If a market research study is decided on and thecriteria of highest EMV is selected then in a best“chance” scenario of action Shuzworld will have afavorable market and also a positive survey result.

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Continued..The Decision Analytical Module together with GraphicDecision Tree was selected as it was thought to be themost suitable decision tool as the choices for Shuzworldcould then be visually observed.Itwould also label the best option and display the pathrecommended in a blue color.The design of the decision tree was based on figuresfrom the 3 scenarios described in the introduction andalso depended on projected operating data. The toolhelped to decide whether or not to pursue with aparticular course of action. The analytical attributes ofthe tool reveal there is a 50:50 chance for encounteringfavorable or unfavorable market conditions.

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