Page 94 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes The correct choice depends largely upon demand, which may be low, medium, or high. By
consensus, management estimates the respective demand probabilities as 0.1, 0.5, and 0.4.
The management also estimates the profits when choosing from the three alternatives (A,
B, and C) under the differing probable levels of demand. These profits, in thousands of
dollars are presented in the table below:

0.1 0.5 0.4
Low Medium High
A 10 50 90
B -120 25 200
C 20 40 60

Which alternative should the management choose?

Answers: Self Assessment

1. False 2. True

3. True 4. True
5. True 6. False
7. False 8. True
9. True 10. True

11. 31250 12. Demand
13. Commodity 14. TVC + TFC
15. Contribution Margin

3.14 Further Readings

Books N G Nair, Production and Operations Management
Stevenson, Operations Management, 8th Edition, Tata McGraw Hill

Upendra Kachru, Production and Operations Management – Text and Cases, Excel
Books, New Delhi

Online links logistics.about.com/od/.../a/Measuring_Capacity.htm
www.enotes.com/management.../make-buy-decisions
www.teamquest.com/pdfs/whitepaper/tqwp23.pdf
www.marcbowles.com/courses/adv.../amc6_ch2tfour6.htm

www.wiley.com/college/sc/eldenburg/ch03.pdf

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