Canonical Decision Problems
Páginas: 23 (5579 palabras)
Publicado: 4 de septiembre de 2011
GEORGE WU HANS LIEBLER
1. Product Development Sequencing
Eldorado Electronics is under contract to make 10,000 medical scanners. Eldorado must decide whether to make or buy the circuit board to which it will attach its proprietary microchip. There are two stages in making a circuit board, development and fabrication. The chance that the Eldorado’s engineers will succeed in development is90%. The cost of development are $50,000. The fabrication stage has an 80% chance of success and will cost $30,000. If both stages are successful, the variable cost of producing a circuit board will be $9/board. The development and fabrication processes use different sets of engineers and can proceed independently. If either stage is unsuccessful, Eldorado must purchase circuit boards from anoutside vendor for a cost of $24/circuit board. The scanners are scheduled for delivery in 8 months. The development and fabrication stages each take 3 months, and assembly of the finished product takes an additional 2 months. Purchasing the circuit boards from an outside source requires a lead time of 3 months, although for a premium of $10/board, Eldorado can purchase boards for immediate delivery. a)Suppose that Eldorado attempts to make the board in-house. How should Eldorado proceed if the goal is to minimize expected costs?
Do
b) Should Eldorado purchase the circuit boards outside or attempt to make the board in-house?
____________________________________________________________
____________________________________________________
Professor George Wu and Research AssociateHans Liebler prepared these vignettes.
Copyright © 1996, 1997, 1999, 2008 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, ortransmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617-783-7860.
No tC
op
It is an understatement to say that managers face many different types of decision problems. This set of decision vignettesfocuses on canonical decision problems. Webster’s New Collegiate Dictionary defines canonical as “reduced to the simplest or clearest schema possible.” In this spirit, these vignettes present simplified versions of some “standard” problems in management, basic problems that arise in surprising frequency. While we have simplified the decision situations, we have tried to preserve the “essence” of theproblems. At the end of the exercises, we include some technical exhibits which suggest approaches for dealing with more complex versions of these problems, as well as some practical suggestions on how to obtain information necessary for analyzing these situations.
yo
Canonical Decision Problems
rP
os t
9-396-308
REV: MARCH 25, 2008
396-308
Canonical Decision Problems
2.Options for flexibility
The problem is that Susan does not know how many customers she will attract with her new service. She believes that it is equally likely that she will attract 400 or 800 subscribers during the first year. If the demand is high in the first year she believes that there is a 50% chance of getting 1,200 subscribers during the second year and a 50% chance that demand will stayat 800. If the demand is low during the first year, there is a 50% chance that it will remain at 400 and a 50% chance that it will go up to 800. Susan plans to charge a $20 flat monthly fee to her subscribers, independent of the hours of usage. The variable costs of setting up the modem connection and monitoring the activities are expected to be $9 per month and customer. The total overhead...
1. Product Development Sequencing
Eldorado Electronics is under contract to make 10,000 medical scanners. Eldorado must decide whether to make or buy the circuit board to which it will attach its proprietary microchip. There are two stages in making a circuit board, development and fabrication. The chance that the Eldorado’s engineers will succeed in development is90%. The cost of development are $50,000. The fabrication stage has an 80% chance of success and will cost $30,000. If both stages are successful, the variable cost of producing a circuit board will be $9/board. The development and fabrication processes use different sets of engineers and can proceed independently. If either stage is unsuccessful, Eldorado must purchase circuit boards from anoutside vendor for a cost of $24/circuit board. The scanners are scheduled for delivery in 8 months. The development and fabrication stages each take 3 months, and assembly of the finished product takes an additional 2 months. Purchasing the circuit boards from an outside source requires a lead time of 3 months, although for a premium of $10/board, Eldorado can purchase boards for immediate delivery. a)Suppose that Eldorado attempts to make the board in-house. How should Eldorado proceed if the goal is to minimize expected costs?
Do
b) Should Eldorado purchase the circuit boards outside or attempt to make the board in-house?
____________________________________________________________
____________________________________________________
Professor George Wu and Research AssociateHans Liebler prepared these vignettes.
Copyright © 1996, 1997, 1999, 2008 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, ortransmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617-783-7860.
No tC
op
It is an understatement to say that managers face many different types of decision problems. This set of decision vignettesfocuses on canonical decision problems. Webster’s New Collegiate Dictionary defines canonical as “reduced to the simplest or clearest schema possible.” In this spirit, these vignettes present simplified versions of some “standard” problems in management, basic problems that arise in surprising frequency. While we have simplified the decision situations, we have tried to preserve the “essence” of theproblems. At the end of the exercises, we include some technical exhibits which suggest approaches for dealing with more complex versions of these problems, as well as some practical suggestions on how to obtain information necessary for analyzing these situations.
yo
Canonical Decision Problems
rP
os t
9-396-308
REV: MARCH 25, 2008
396-308
Canonical Decision Problems
2.Options for flexibility
The problem is that Susan does not know how many customers she will attract with her new service. She believes that it is equally likely that she will attract 400 or 800 subscribers during the first year. If the demand is high in the first year she believes that there is a 50% chance of getting 1,200 subscribers during the second year and a 50% chance that demand will stayat 800. If the demand is low during the first year, there is a 50% chance that it will remain at 400 and a 50% chance that it will go up to 800. Susan plans to charge a $20 flat monthly fee to her subscribers, independent of the hours of usage. The variable costs of setting up the modem connection and monitoring the activities are expected to be $9 per month and customer. The total overhead...
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