Strategic Decision Making Case Assignments
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Case Assignments
MM5010 Strategic Decision Making andNego8a8on
29111311 Haidir Afesina (fezi)
2911132 Hendra Winata
29111329 Mita Listyatri
2911133 Andek Prabowo
29111344 Aprian Eka Rahadi
2911134 Chairunnisa Mirhelina
2911137 Franciscus Xaverius Kresna Paska
29111393 Agung Indri Pramantyo
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Iden8fy Concerns Set Priority ProcessMajor Concern Subconcern Timing Trend Impact Ac8on
neededPrevent more oil
from spilling Number of damageCompartments H L H DATanker slipping off M H H PPA
Dispersing Spilledoil
Environmental
concerns H H H DAAvailability of
Chemical H L M PAContaining Oil
spill Floa>ng Booms H H H PAProtec>ng Fisheries H H H DA
Protec>ng Island
Shore L M L DA
#1. Exxcon Valdez
Situa>on Analysis
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Iden8fy Concerns Set Priority ProcessMajor Concern Subconcern Timing Trend Impact Ac8on
neededTom`s work Projects H M H PA
New Job M L M DA
Financialproblems
Braces for kids L M M DA
New car M H H DA
Paint house L M M DA
Water leak in
basement
M M M PA/DA
Sara ge[ng a job Managing children L L H PA/DA
Finding part >me
job
L L H DA
#2. The ADAMS Family
Situa>on Analysis
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PROBLEM ANALYSIS
PRIMARY
A new alloy in zeniths sheetsteel is causing excessive
burning in the presses
SECONDARY
Burger decided to let the directorwas accused of drinkingemployees
Lack of discipline Workers strict inspec>on whethersomeone deliberately
Worker strike to go get a newcontract
All execu>ve agree Factoryprocessing capacity and laborproblems, in addi>on toproducing
The need of training to improveemployee moral
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#3. KT Problem AnalysisDevia>on : Excessive rejects from buring on quarter panels
Is Is not dis8nc8on cause
WHATdevia8on
object
Burrs
Panther panels
Any other complaints
cheetah panels
Deep draw
WHEREon object
observed
Panther panels
Lines 1,2, & 4
Other parts line 3 Deep draw
WHENon object
observed
Line 2 (09.33 AM)
Line 1 (10.1 AM)
Line 4 (11.23 AM)
Any burrs before
these 8mes on line
2,1 & 4
Line 3 at any 8me
Stacks of Zenith
blanks began to be
used at this 8me
New alloy in Zenith
steel
EXTENDHow Much
How many
Bad burring
Line 2: 11% reject
Line 1: 10% reject
Line 4: 15% reject
Line 3 reject
Reject rates not propor8onal to involvement
in FarrelValen8 conflict
Possible cause fortest A new alloy in zeniths sheet steel is causing excessive burning in the presses
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Oh, Nuts!!! *
The NutsnBolts Auto Parts Company manufactures and distributes auto parts throughout the United States. Over a period ofseveral months, they have been receiving a large number of complaints about corroded bolts from consumers. Virtually all of the
complaints were received between June and August. There were a few complaints during some of the other months, but almost
none in January and February.In addi>on to its manufacturing plant in Detroit, NutsnBolts has four major distribu>on centers in Atlanta, Phoenix, Denver, and
Houston, where shipments from Detroit are stored in warehouses. There seems to be a strong geographical pa]ern to thecomplaints with respect to where shipments originated. A majority of the complaints came from shipments from the regions in
Houston and Atlanta. Virtually no complaints came from the centers at Denver and Phoenix. Sampling indicates that not every
part from any given shipment is corroded; only some of the parts, some of the >me, from certain geographical loca>ons. Also,due to excellent quality control, virtually no product leaves the plant with any signs of corrosion.
The parts are packaged in cardboard boxes, with cardboard placed in between layers of bolts to act as a shock absorber. A few
years ago paper was supplied exclusively by Wolverine Paper, whose plant is located near Lake Superior in Michigan. The newlyappointed manager in the NutsnBolts packaging department noted that Wolverine Paper was overcharging for their product
and decided to look into other suppliers.The best price offered by far (almost 20% cheaper than the next lowest bid) was from Acadia Paper, located in Maine. Research
into how Acadia was able to provide such a low bid yielded the following informa>on. The plant was intended to produce highgrade paper, but the water intake for the mill is located in a >dal basin, allowing seawater to enter the processing water supply.
Because of this, only lowgrade paper can be produced at the plant. In order to get rid of their excess lowgrade paper, Acadia
began offering packaging paper well below the market price.
The manager also set up a contract with Badger Paper, whose plant is located near Lake Michigan in Wisconsin. Badger hadrecently been fined by the Environmental Protec>on Agency for dumping excessive waste in Lake Michigan. As a result, severalchanges in Badgers produc>on were made to stay within the EPAs waste limits. This resulted in a decrease in the overall paper
quality. In addi>on to these two suppliers, NutsnBolts s>ll purchased some of its paper from Wolverine Paper Co. Current prices
offered by the paper companies determine which companys paper ends up as packaging material for any batch of product.A confounding factor is that NutsnBolts has no>ced that the quality of the steel to make bolts provided by Heavy Metal has
decreased substan>ally aer several key personnel re>red. On one occasion Heavy Metal tried to supply materials that arrivedexhibi>ng excessive amounts of corrosion. The president of NutsnBolts had the shipment sent back to Heavy Metal and
threatened to pull the account. Aer this, there were two other similar incidents of corroded Heavy Metal materials reported.
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#4. Nuts & Bolts KT Problem AnalysisDevia>on : What causes the corrosion in the product
Is Is not dis8nc8on cause
WHAT Corroded product Non corrodedproduct
Corrosion Salt
WHERE In Atlanta andHouston
Badger or AcadiaPlant
Denver and Phoenix
Wolverine Plant
Type of climate
Salt in AcadiaNo salt in badger orWolverine
Effect of humidity oncorrosion
Tidal basin
contamina>on
WHEN Summer
Aer new paper
companies added
Winter
Before new paper
companies added
Temperature andhumidity
Different paper
companies process
Moist paper
Salt in paper
EXTEND Some of the product
All bolts in shipment
All of the product
All bolts in boxes
Different paper forpackaging
Something contac>ng
surface of all bolts
Different papercompanies
Packaging material
Possible cause fortest
Salt in paper is moving onto parts through water from humid air
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Ragin Cajun Chicken* Wes Thompson is a manager of a Burgermeister restaurant, which specializes in fast
food hamburgers. He has just been notified by the corporation that a new chickensandwich, called Ragin Cajun Chicken, will be introduced into Burgermeisterrestaurants in two weeks. This surprised Wes because he has never heard anythingabout the new sandwich from the company or from advertisements. The memo saysthat plans for a national advertising campaign have unfortunately been delayed untilafter the introduction of the sandwich.
The memo also says that next week, Wess restaurant will receive a shipment of 500Ragin Cajun Chickens. These are shipped frozen and have a shelf life of threemonths in the freezer. The notification also stresses the importance of properhandling of the uncooked chicken. In order to prevent cross-contamination bysalmonella, the bacteria present in some raw chicken, specially marked tongs will beused to handle only uncooked chicken.
With the shipment of the chicken, Wess restaurant will receive a new broiler to beused exclusively for the new sandwich. It is important that the broiler operate at leastat 380F to ensure that the chicken will be fully cooked in the five-minute preparationtime.
Wes thought that it was very important that the transition run smoothly when RaginCajun Chicken would be added to the menu in two weeks. To prevent any problems,he noted concerns in four areas and constructed the following PPA table.
h k
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#5. Rajun chickenPoten>al Problem Analysis
Poten8al Problem Consequence Possible cause Preven8ve ac8on Con8gent ac8on
People dont buy
sandwich
Restaurant losses
money
Customers dont know
about sandwichToo expensive
Food too spicy
Make own signs for
sandwich
Compare unit cost
with compe>>on
Inform customers ofmild variety
Have cashiers suggest
chicken to customersRun promo>onal
specials
Run promo>onalspecials
Bacteria in food Illness, lawsuits Employees dont handle
raw chicken properly
Improper use of broiler
Chicken stored too long
Freezer not cold enough
Train employees
Train employees
Set up da>ng system
Perform temperature
checks
Perform periodic
inspec>ons
Perform periodic
inspec>ons
Inspect and discardchicken if necessary
Inspect and discard
chicken if necessary
Substandardsandwich quality
Customers complain,no return business
Wrong items onsandwich
Sandwich sits too long
under heat lamps
Have cashiers doublecheck accuracy
Mark discard >mes on
sandwich
Provide free remadesandwiches for affected
customers
Inspect sandwiches
before serving
Substandard andservice quality Customers complain,no return business Sandwich prepara>ontakes too long Always have chickenprecooked Have sandwichpremade
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A Bri>sh company has won an important contract to supply components regularly to
Poland. Four methods of transport are being considered: (i) air, (ii) sea, (iii) road and
ferry, and (iv) rail and ferry. The companys distribu>on manager has iden>fied four
relevant a]ributes for the decision:punctuality, safety of cargo, convenience, and costs.She has also allocated weights of 30 to punctuality, 60 to safety of cargo, and 10 to
convenience.
The manager then rated the performance of each form of transport on the different
a]ributes. The values she assigned are shown below together with the es>mated annual
cost of using each form of transport.
a. Determine the form of transport which has the highest valued overall benefits,assuming that mutual preference independence exists between the a]ributes.
b. For each form of transport, plot the value of overall benefits against costs and henceiden>fy the forms of transport which lie on the efficient fron>er.
c. If the manager would be prepared to pay $ 70,000 per year to move from the leastsafe to the most safe form of transport (all else remaining equal), determine whichalterna>ve she should select.
#6. SMART Case of Transporta>on
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Stage 1
& 2
Decision Maker Manager from Bri8sh company
Alterna>ve courses Air
Sea
Road & ferry
Rail & ferry
Parameter Sub Parameter
Benefit Punctuality
Safety
Convenience
Stage 3
Form oftransport
Benefit Costs ($)Punctuality Safety Convenience
Air 100 70 60 150,000
Sea 0 60 80 90,000
Road & ferry 60 0 100 40,000
Rail & ferry 70 100 0 70,000
Stage 4
S
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Stage 5
Stage 6
Aribute Weigh8ng
Punctuality
Safety
Convenience
30%
60%
10%
TOTAL 100%
Aribute Weigh8ng Air Sea Road&ferry
Rail & ferry
Punctuality
Safety
Convenience
30%
60%
10%
100
70
60
0
60
80
60
0
100
70
100
0
Aggregate benefit 7 44 2 1
Benefits
Punctuality Safety
Costs
Convenience
Value Tree
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Transporta8onmodel
Total cost ($) Aggregatebenefit
AB
C
D
AirSea
Rail & Ferry
Road & Ferry
150,00090,000
70,000
40,000
7844
81
28
Stage 7
A,C,D: Efficient fron>er
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A D
$150.000 7 $70.000 1
C
$40.000($150.000$40.000) = $2,200
(7828)
($70.000$40.000) = $567
(8128)2
D
$70.000($150.000$70.000) = $26,667
(8178)1
Decision maker`s extra value: $70,000/60 = $1,166.67
Decision maker compare C&D
*if extra value point < $567 C (Rail & Road)
*if extra value point $567 D (Rail & )Decision maker compare C&A
*if extra value point < $2,200 C (Rail & Road)
*if extra value point $2,200 A (Air)
Decision maker compare A&D
*if extra value point < $26,667 D (Rail & ferry)
*if extra value point $26,667 A (Air)
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Sensi>vity Analysis
i h l d li
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Weight placed on Punctuality
70 80 90 10060
150015001500150015001500150015001500150015001500
0 10 20 30 40 50
0
10
20
30
40
50
60
70
80
90
100
0
0
0
0
0
0
0
0
0
0
0
Valueofbenefit
weight placed onpunctuality
1500 0
0
0
0
0
0
0
0
0
0
10
20
30
40
50
60
70
80
90
100
0
Valueofbenefit
34,7830
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Weight placed on Punctuality
As long weight of punctuality < 34,78 then Rail and Ferry is the most a]rac>ve When weight of punctuality 34,78 then Air is the most a]rac>ve
70 80 90 10060
150015001500150015001500150015001500150015001500
0 10 20 30 40 500
10
20
30
40
50
60
70
80
90
100
0
0
0
0
0
0
0
0
0
0
0
Value
ofbenefit
1500 0
0
0
0
0
0
0
0
0
0
10
20
30
40
50
60
70
80
90
100
0
Value
ofbenefit
34,7830
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Sensi>vity Analysis
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Weight placed on Safety
70 80 90 10060
150015001500150015001500150015001500150015001500
0 10 20 30 40 50
0
10
20
30
40
50
60
70
8090
100
0
0
0
0
0
0
0
0
00
0
Valueofbenefit
weight placed on safety
1500 0
0
0
0
0
0
0
0
0
0
10
20
30
40
50
60
70
80
90
100
0
Valueofbenefit
55,88 60
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Weight placed on Safety
As long weight of safety < 55,88 then Air is the most a]rac>ve When weight of safety 55,88 then Rail and Ferry is the most a]rac>ve
70 80 90 10060
150015001500150015001500150015001500150015001500
0 10 20 30 40 50
0
10
20
30
4050
60
70
80
90
100
0
0
0
0
00
0
0
0
0
0
Valueofbenefit
weight placed on safety
1500 0
0
0
00
0
0
0
0
0
10
20
30
40
50
60
70
80
90
100
0
Valueofbenefit
55,88 60
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Sensi>vity Analysis
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Weight placed on Convenience
70 80 90 10060
150015001500150015001500150015001500150015001500
0 10 20 30 40 50
0
10
20
30
40
50
60
70
8090
100
0
0
0
0
0
0
0
0
00
0
Valueofbenefit
weight placed onconvenience
1500 0
0
0
0
0
0
0
00
0
10
20
30
40
50
60
70
8090
100
0
Valueofbenefit
14,2810 60
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Weight placed on Convenience
As long weight of convenience < 14,28 then Rail and Ferry is the most a]rac>ve If weight of convenience (x) = 14,28 < x < 60 then Air is the most a]rac>ve When weight of convenience 60 then Road and Ferry is the most a]rac>ve
70 80 90 10060
150015001500150015001500150015001500150015001500
0 10 20 30 40 50
0
10
20
30
40
50
60
70
80
90100
0
0
0
0
0
0
0
0
0
00
Valueofbenefit
weight placed onconvenience
1500 0
0
0
0
0
0
0
0
00
10
20
30
40
50
60
70
80
90
100
0
Valueofbenefit
14,2810 60
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Answers
1. Rail & ferry has the highest value for aggregate benefits i.e. 81
2. Rail & ferry (C) and Road & ferry (D) lie of the efficient fron>er
3. The decision: The manager is prepared to pay $1167 for each extra benefit point ($70 000/60).A switch from road/ferry to rail/ferry would cost $567 for each extra benefit point
($30,000/53) and is therefore worth making. Therefore choose rail/ferry.
The manager is prepared to pay $1167 for each extra benefit point ($70 000/60).A switch from rail/road to Air would cost $2,200 for each extra benefit point ($110,000/50)
and is therefore worth making. Therefore choose rail/road.
The manager is prepared to pay $1167 for each extra benefit point ($70 000/60).A switch from rail/ferry to Air would cost $26,667 for each extra benefit point ($80,000/3)
and is therefore worth making. Therefore choose rail/ferry.
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Management of the Telemore Company is considering developingand marketing a new product. It is estimated to be 66.67% that theproduct would be successful. If it were successful, the expectedprofit would be $1,500,000. If unsuccessful, the expected losswould be $1,800,000. A marketing survey can be conducted as a
cost of $100,000 to predict whether the product would besuccessful. Past experience with such surveys indicates if thesurvey shows favorable result, the product will be successful 80percent of time. If the survey shows unfavorable result, the productwill be unsuccessful 70 percent of time. The probability that themarketing survey show a favorable result is 50%.
Develop a decision tree for the problem.Which is the best solution?
#7.Decision Tree Case of Telemore
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Decision to go with the
MAX PROFITExpected Value (EV)
Expected Value (EV)
MAXExpected Value (EV) Payoff
80%
Suce ssf ul P( Su c | F av)
$1,400,000
Product Development $1,500,000 $1,400,000
$0 $740,000 20%
50% Unsuccessful P(Unsuc | Fav)
Favorable P(Fav) $1,900,000
1 $1,800,000 $1,900,000
$0 $740,000
No Product Development
$100,000
$0 $100,000
Survey
30%
$100,000 $320,000 S ucess fu l P (S uc | U nfav )
$1,400,000Product Development $1,500,000 $1,400,000
$0 $910,000 70%
50% Unsuccessful P(Unsuc | Unfav)
Unfavorable P(Unfav) $1,900,000
2 $1,800,000 $1,900,000
$0 $100,000
2 No Product Development
$400,110 $100,000
$0 $100,000
66.67%
Sucessful
$1,500,000
Product Development $1,500,000 $1,500,000
$0 $400,110 33.33%
Unsuccessful
Without Survey $1,800,000
1 $1,800,000 $1,800,000
$0 $400,110
No Product Development
$0
$0 $0
Please Choose
Without Survey
STEP 1 Generating Decision Tree
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Alterna8ve 1 (WITH SURVEY)
Probability Amount
Successful 0.6667 1,500,000
Unsuccessful 0.3333 (1,800,000)
Alterna8ve 2 (WITHOUT SURVEY) Probabilityconducted show favorable 0.
Favorable Unfavorable
Successful 0.4 0.15 0.6667
Unsuccessful 0.1 0.35 0.3333
TOTAL 0.5 0.5 1
P(favorable) = 0.5P(unfavorable) = 0.5
P(successful) = 0.6667
P(unsuccessful) = 0.333
P(Successful I favorable) = 0.P(Unsuccessful I favorable) = 0.2P(successful I unfavorable) = 0.3
P(unsuccessful I unfavorable) = 0.7
NO
SURVEYNEEDED
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A large machine in a factory has broken down and the company that owns the factory will incur costs of
$3200 for each day the machine is out of ac>on. The factorys engineer has three immediate op>ons:
Op3on 1: He can return the machine to the supplier who has agreed to collect, repair and return itfree of charge, but not to compensate the company for any losses they might incur while the repair
is being carried out. The supplier will not agree to repair the machine if anyother person has
previously a]empted to repair it. If the machine is returned, the supplier will guarantee to return it
in working order in 10 days >me.
Op3on 2: He can call in a specialist local engineering company. They will charge $20 000 to carryout the repair and they es>mate that there is a 30% chance that they will be able to return themachine to working order in 2 days. There is, however, a 70% chance that repairs will take 4 days.
Op3on : He can a]empt to carry out the repair work himself, and he es>mates that there is a 50%chance that he could mend the machine in 5 days. However, if at the end of 5 days the a]empted
repair has not been successful he will have to decide whether to call in the local engineering
company or to make a second a]empt at repair by inves>ga>ng a different part of the mechanism.
This would take 2 further days, and he es>mates that there is a 25% chance that this second
a]empt would be successful. If he fails at the second a]empt, he will have no alterna>ve other
than to call in the local engineering company. It can be assumed that the probability distribu>on
for the local engineering companys repair >me will be unaffected by any work which the factory
engineer has carried out.
Assuming that the engineers objec>ve is to minimize expected costs, what course(s) of ac>on should he
take?
#8.Decision Tree Case
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SELF
REPAIR
$3070
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Westward Magazine Publishers are thinking of launching a new fashion magazine for women in theunder25 age group. Their original plans were to launch in April of next year, but informa>on has beenreceived that a rival publisher is planning a similar magazine. Westward now have to decide whether
to bring their launch forward to January of next year, though this would cost an addi>onal $500 000. If
the launch is brought forward it is es>mated that the chances of launching before the rival are about
80%. However, if the launch is not brought forward it is thought that there is only a 30% chance of
launching before the rival.
For simplicity, the management of Westward have assumed that the circula>on of the magazinethroughout its life will be either high or low. If Westward launch before the rival, it is thought thatthere is a 75% chance of a high circula>on. However, if the rival launches first, this probability is
es>mated to be only 50%. If the rival does launch first then Westward could try to boost sales by
increasing their level of adver>sing. This would cost an extra $200 000, but it is thought that it would
increase the probability of a high circula>on to 70%. This increased adver>sing expenditure would not
be considered if Westwards magazine was launched first. Westwards accountants have es>mated
that a high circula>on would generate a gross profit over the magazines life>me of $4 million. A low
circula>on would bring a gross profit of about $1 million. It is important to note, however, that thesegross profits do not take into account addi3onal expenditure caused by bringing the launch forward or
by increased adver>sing.
Draw a decision tree to represent Westwards problem and determine the policy that they shouldchoose.
#9.Decision Tree Case
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Launch in
APRIL
$3,000,5000