Homework Help is Here – Start Your Trial Now!
Business
Operations Management
D-1. THE AMERICO OIL CO. CONSIDERING MAKING A BID FOR A SHALE OIL DEVELOPMENT CONTRACT TO BE AWARDED BY THE FEDERAL GOVERNMENT. THE COMPANY HAS DECIDED TO BID $100M. THE CO. ESTIMATES THAT IT HAS 60% CHANCE OF WINNING THE CONTRACT WITH HIS BID. IF THE Co. WINS THE CONTRACT, IT CAN CHOOSE 1 OF THE 3 METHODS FOR GETTING THE OIL FROM THE SHALE: IT CAN DEVELOP A NEW METHOD FOR OIL EXTRACTION, USE AN EXISTING (INEFFICIENT) PROCESS, OR SUBCON THE PROCESSING OUT TO A NUMBER OF SMALLER COMPANIES ONCE THE SHALE HAS BEEN EXCAVATED. THE RESULTS FROM THESE ALTERNATIVES ARE GIVEN AS FOLLOWS: DEVELOP NEW PROCESS PROBABILITY OUTCOMES GREAT SUCCESS MODERATE SUCCESS PROFIT(M) $600 0.40 0.50 300 FAILURE 0.10 (100) USE PRESENT PROCESS OUTCOMES GREAT SUCCESS MODERATE SUCCESS PROFIT(M) $300 PROBABILITY 0.50 0.40 200 FAILURE 0.10 (40) SUBCONTRACT OUTCOMES PROBABILITY PROFIT(M) MODERATE SUCCESS 1.00 250 THE COST OF PREPARING THE CONTACT PROPOSAL IS $3M. IF THE CO. DOES NOT MAKE A BID, IT WILL INVEST IN AN ALTERNATIVE VENTURE WITH A GUARANTEED PROFIT OF $25M. CONSTRUCT A DECISION TREE FOR THIS SITUATION & DETERMINE WHETHER THE CO SHOULD MAKE A BID. C-2. Determine the best Alternative, if data are COST Low denand (4) High demand (.6) ize expected munetary van $40 Do nothing S40 Overtime $50 Expand Build umall $55 Do nothing1$i0) Burild lorge Low demand [4) High demand (.6) Reduce prices $50 $70

D-1. THE AMERICO OIL CO. CONSIDERING MAKING A BID FOR A SHALE OIL DEVELOPMENT CONTRACT TO BE AWARDED BY THE FEDERAL GOVERNMENT. THE COMPANY HAS DECIDED TO BID $100M. THE CO. ESTIMATES THAT IT HAS 60% CHANCE OF WINNING THE CONTRACT WITH HIS BID. IF THE Co. WINS THE CONTRACT, IT CAN CHOOSE 1 OF THE 3 METHODS FOR GETTING THE OIL FROM THE SHALE: IT CAN DEVELOP A NEW METHOD FOR OIL EXTRACTION, USE AN EXISTING (INEFFICIENT) PROCESS, OR SUBCON THE PROCESSING OUT TO A NUMBER OF SMALLER COMPANIES ONCE THE SHALE HAS BEEN EXCAVATED. THE RESULTS FROM THESE ALTERNATIVES ARE GIVEN AS FOLLOWS: DEVELOP NEW PROCESS PROBABILITY OUTCOMES GREAT SUCCESS MODERATE SUCCESS PROFIT(M) $600 0.40 0.50 300 FAILURE 0.10 (100) USE PRESENT PROCESS OUTCOMES GREAT SUCCESS MODERATE SUCCESS PROFIT(M) $300 PROBABILITY 0.50 0.40 200 FAILURE 0.10 (40) SUBCONTRACT OUTCOMES PROBABILITY PROFIT(M) MODERATE SUCCESS 1.00 250 THE COST OF PREPARING THE CONTACT PROPOSAL IS $3M. IF THE CO. DOES NOT MAKE A BID, IT WILL INVEST IN AN ALTERNATIVE VENTURE WITH A GUARANTEED PROFIT OF $25M. CONSTRUCT A DECISION TREE FOR THIS SITUATION & DETERMINE WHETHER THE CO SHOULD MAKE A BID. C-2. Determine the best Alternative, if data are COST Low denand (4) High demand (.6) ize expected munetary van $40 Do nothing S40 Overtime $50 Expand Build umall $55 Do nothing1$i0) Burild lorge Low demand [4) High demand (.6) Reduce prices $50 $70

Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.2SB
See similar textbooks
icon
Related questions
Question
D-1. THE AMERICO OIL CO. CONSIDERING MAKING A BID FOR A SHALE OIL DEVELOPMENT CONTRACT TO BE AWARDED BY THE FEDERAL GOVERNMENT. THE COMPANY HAS DECIDED TO BID $100M. THE CO. ESTIMATES THAT IT HAS 60% CHANCE OF WINNING THE CONTRACT WITH HIS BID. IF THE CO. WINS THE CONTRACT, IT CAN CHOOSE 1 OF THE 3 METHODS FOR GETTING THE OIL FROM THE SHALE: IT CAN DEVELOP A NEW METHOD FOR OIL EXTRACTION, USE AN EXISTING (INEFFICIENT) PROCESS, OR SUBCON THE PROCESSING OUT TO A NUMBER OF SMALLER COMPANIES ONCE THE SHALE HAS BEEN EXCAVATED. THE RESULTS FROM THESE ALTERNATIVES ARE GIVEN AS FOLLOWS: DEVELOP NEW PROCESS PROFIT(M) $600 OUTCOMES PROBABILITY GREAT SUCCESS 0.40 MODERATE SUCCESS 0.50 300 FAILURE 0.10 (100) USE PRESENT PROCESS PROFIT(M) $300 OUTCOMES PROBABILITY GREAT SUCCESS 0.50 MODERATE SUCCESS 0.40 200 FAILURE 0.10 (40) SUBCONTRACT OUTCOMES PROBABILITY PROFIT(M) MODERATE SUCCESS 1.00 250 THE COST OF PREPARING THE CONTACT PROPOSAL IS $3M. IF THE CO. DOES NOT MAKE A BID, IT WILL INVEST IN AN ALTERNATIVE VENTURE WITH A GUARANTEED PROFIT OF $25M. CONSTRUCT A DECISION TREE FOR THIS SITUATION & DETERMINE WHETHER THE CO SHOULD MAKE A BID. C-2. Determine the best Alternative, if data are COST ize expected monetary vann.. $40 Low dernand (.4) High demand (.6) Do nothing+ S40 Overtime #$50 Expand Build smal $55 Do nothing ($io Build large Low demand (.4) High demand (6) Recuce prices $50 $70
Transcribed Image Text:D-1. THE AMERICO OIL CO. CONSIDERING MAKING A BID FOR A SHALE OIL DEVELOPMENT CONTRACT TO BE AWARDED BY THE FEDERAL GOVERNMENT. THE COMPANY HAS DECIDED TO BID $100M. THE CO. ESTIMATES THAT IT HAS 60% CHANCE OF WINNING THE CONTRACT WITH HIS BID. IF THE CO. WINS THE CONTRACT, IT CAN CHOOSE 1 OF THE 3 METHODS FOR GETTING THE OIL FROM THE SHALE: IT CAN DEVELOP A NEW METHOD FOR OIL EXTRACTION, USE AN EXISTING (INEFFICIENT) PROCESS, OR SUBCON THE PROCESSING OUT TO A NUMBER OF SMALLER COMPANIES ONCE THE SHALE HAS BEEN EXCAVATED. THE RESULTS FROM THESE ALTERNATIVES ARE GIVEN AS FOLLOWS: DEVELOP NEW PROCESS PROFIT(M) $600 OUTCOMES PROBABILITY GREAT SUCCESS 0.40 MODERATE SUCCESS 0.50 300 FAILURE 0.10 (100) USE PRESENT PROCESS PROFIT(M) $300 OUTCOMES PROBABILITY GREAT SUCCESS 0.50 MODERATE SUCCESS 0.40 200 FAILURE 0.10 (40) SUBCONTRACT OUTCOMES PROBABILITY PROFIT(M) MODERATE SUCCESS 1.00 250 THE COST OF PREPARING THE CONTACT PROPOSAL IS $3M. IF THE CO. DOES NOT MAKE A BID, IT WILL INVEST IN AN ALTERNATIVE VENTURE WITH A GUARANTEED PROFIT OF $25M. CONSTRUCT A DECISION TREE FOR THIS SITUATION & DETERMINE WHETHER THE CO SHOULD MAKE A BID. C-2. Determine the best Alternative, if data are COST ize expected monetary vann.. $40 Low dernand (.4) High demand (.6) Do nothing+ S40 Overtime #$50 Expand Build smal $55 Do nothing ($io Build large Low demand (.4) High demand (6) Recuce prices $50 $70
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS