IN-CLASS QUIZ: Decision Tree Problem
- Due No due date
- Points 8
- Questions 4
- Available Feb 3, 2023 at 6:30pm - Feb 3, 2023 at 9:30pm 3 hours
- Time Limit None
Instructions
About This Quiz
Start this quiz by reading the prompt and then answering the questions below. We will complete this quiz during our Week 3 Live Session. Submit this quiz for part of your participation credit for Week 3.
- Course content tested: SCM Chapter 6
- Quiz format: Multiple Choice
- Time limit: None
- Number of attempts: 1
Scenario 6.1
Bahouth Ltd. is planning for the next two years of production and debating whether to construct a large cross-dock facility with 40 truck bays or a smaller one with 20 truck bays. The cost to build the large facility is $2 million and the cost to build the small one is $1.2 million. If they construct a large facility and demand is as high as they hope, then operating costs are $450,000 annually. If they construct a large facility and demand is low, then operating costs are $300,000. If they construct a small facility and demand is low, the operating costs are $275,000 but if they experience high demand, the operating cost of a small facility increases to $600,000. After having conducted some market research, they feel that the likelihood of high demand is 0.7 and the likelihood of small demand is 0.3. Assume no discount rate year over year.