Case Assignments MM5010 Strategic Decision Making and Nego8a8on 29111311 2911132 29111329 2911133 29111344 2911134 2911137 29111393
Haidir Afesina (fezi) Hendra Winata Mita Listyatri Andek Prabowo Aprian Eka Rahadi Chairunnisa Mirhelina Franciscus Xaverius Kresna Paska Agung Indri Pramantyo
#1. Exxcon Valdez Situa>on Analysis Iden8fy Concerns Major Concern
Sub‐concern
Containing Oil spill
Process
Timing
Trend
Impact
Ac8on needed
H
L
H
DA
M
H
H
PPA
Environmental concerns Availability of Chemical Floa>ng Booms
H
H
H
DA
H
L
M
PA
H
H
H
PA
Protec>ng Fisheries
H
H
H
DA
Protec>ng Island Shore
L
M
L
DA
Prevent more oil Number of damage Compartments from spilling Tanker slipping off Dispersing Spilled oil
Set Priority
#2. The ADAMS Family Situa>on Analysis Iden8fy Concerns
Set Priority
Process
Major Concern
Sub‐concern
Timing
Trend
Impact
Ac8on needed
Tom`s work
Projects
H
M
H
PA
New Job
M
L
M
DA
Braces for kids
L
M
M
DA
New car
M
H
H
DA
Paint house
L
M
M
DA
Water leak in basement Managing children
M
M
M
PA/DA
L
L
H
PA/DA
Finding part >me job
L
L
H
DA
Financial problems
Sara ge[ng a job
PROBLEM ANALYSIS PRIMARY
SECONDARY
• A new alloy in zenith’s sheet
• Burger decided to let the director
steel is causing excessive burning in the presses
• • • •
•
was accused of drinking employees Lack of discipline Workers strict inspec>on whether someone deliberately Worker strike to go get a new contract All execu>ve agree Factory processing capacity and labor problems, in addi>on to producing The need of training to improve employee moral
#3. KT Problem Analysis Devia>on : Excessive rejects from buring on quarter panels Is
Is not
dis8nc8on
WHAT devia8on object
Burrs Panther panels
Any other complaints cheetah panels
Deep draw
WHERE on object observed
Panther panels Lines 1,2, & 4
Other parts line 3
Deep draw
‐
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
Bad burring
Line 3 reject
Line 2: 11% reject Line 1: 10% reject Line 4: 15% reject
‐
WHEN on object observed
EXTEND How Much How many
Possible cause for
cause
‐
Reject rates not propor8onal to involvement in Farrel‐Valen8 conflict
A new alloy in zenith’s sheet steel is causing excessive burning in the presses
Oh, Nuts!!! * The Nuts‘n’Bolts Auto Parts Company manufactures and distributes auto parts throughout the United States. Over a period of several 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, Nuts‘n’Bolts 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 the complaints 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 newly appointed manager in the Nuts‘n’Bolts 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 high‐ grade 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 low‐grade paper can be produced at the plant. In order to get rid of their excess low‐grade 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 had recently been fined by the Environmental Protec>on Agency for dumping excessive waste in Lake Michigan. As a result, several changes in Badger’s produc>on were made to stay within the EPA’s waste limits. This resulted in a decrease in the overall paper quality. In addi>on to these two suppliers, Nuts‘n’Bolts s>ll purchased some of its paper from Wolverine Paper Co. Current prices offered by the paper companies determine which company’s paper ends up as packaging material for any batch of product. A confounding factor is that Nuts‘n’Bolts 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 arrived exhibi>ng excessive amounts of corrosion. The president of Nuts‘n’Bolts 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.
#4. Nuts & Bolts KT Problem Analysis Devia>on : What causes the corrosion in the product Is
Is not
dis8nc8on
cause
WHAT
Corroded product
Non corroded product
Corrosion
Salt
WHERE
In Atlanta and Houston
Denver and Phoenix
Type of climate
Effect of humidity on corrosion
Wolverine Plant Badger or Acadia Plant WHEN
EXTEND
Possible cause for
Salt in Acadia No salt in badger or Wolverine
Tidal basin contamina>on
Summer
Winter
Temperature and humidity
Moist paper
Aer new paper companies added
Before new paper companies added
Different paper companies process
Salt in paper
Some of the product
All of the product
Different paper for packaging
Different paper companies
All bolts in shipment
All bolts in boxes
Something contac>ng surface of all bolts
Packaging material
Salt in paper is moving onto parts through water from humid air
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 chicken sandwich, called Ragin Cajun Chicken, will be introduced into Burgermeister restaurants in two weeks. This surprised Wes because he has never heard anything about the new sandwich from the company or from advertisements. The memo says that plans for a national advertising campaign have unfortunately been delayed until after the introduction of the sandwich. The memo also says that next week, Wes s restaurant will receive a shipment of 500 Ragin Cajun Chickens. These are shipped frozen and have a shelf s helf life of three months in the freezer. The notification also stresses the importance of proper handling of the uncooked chicken. In order to prevent cross-contamination by salmonella, the bacteria present in some raw chicken, specially marked tongs will be used to handle only uncooked chicken. With the shipment of the chicken, chick en, Wes s restaurant will receive a new broiler to be used exclusively for the new sandwich. It is important that the broiler operate at least at 380°F to ensure that the chicken c hicken will be fully cooked c ooked in the five-minute preparation time. Wes thought that it was very important that the transition run smoothly when Ragin Cajun Chicken would be added to the menu in two weeks. To To prevent any problems,
•
•
•
#5. Rajun chicken Poten>al Problem Analysis Poten8al Problem
Consequence
Possible cause
Preven8ve ac8on
Con8gent ac8on
People don’t buy sandwich
Restaurant losses money
Customers don’t know about sandwich Too expensive
Make own signs for sandwich
Have cashiers suggest chicken to customers Run promo>onal specials
Food too spicy Bacteria in food
Substandard sandwich quality
Substandard and
Illness, lawsuits
Customers complain, no return business
Customers complain,
Compare unit cost with compe>>on Inform customers of mild variety
Run promo>onal specials
Employees don’t handle raw chicken properly
Train employees
Perform periodic inspec>ons
Improper use of broiler
Train employees
Chicken stored too long
Set up da>ng system
Freezer not cold enough
Perform temperature checks
Perform periodic inspec>ons Inspect and discard chicken if necessary Inspect and discard chicken if necessary
Wrong items on sandwich
Have cashiers double check accuracy
Sandwich sits too long under heat lamps
Mark discard >mes on sandwich
Provide free remade sandwiches for affected customers Inspect sandwiches before serving
Sandwich prepara>on
Always have chicken
Have sandwich
#6. SMART Case of Transporta>on 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 company’s 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 hence iden>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 least safe to the most safe form of transport (all else remaining equal), determine which
Stage 1 &2
Stage 3
Stage 4
Decision Maker
Manager from Bri8sh company
Alterna>ve courses
Air Sea Road & ferry Rail & ferry
Parameter
Sub Parameter
Benefit
Punctuality Safety Convenience Benefit
Form of transport
Punctuality
Safety
Convenience
Air
100
70
60
150,000
Sea
0
60
80
90,000
Road & ferry
60
0
100
40,000
Costs ($)
Stage 5 Aribute
Weigh8ng
Punctuality Safety Convenience
30% 60% 10%
TOTAL
100%
Value Tree Costs
Benefits
Punctuality
Safety
Convenience
Stage 6 Aribute
Weigh8ng
Air
Sea
Road& ferry
Rail & ferry
30% 60% 10%
100 70 60
0 60 80
60 0 100
70 100 0
Aggregate benefit
7
44
2
1
Punctuality Safety Convenience
Stage 7
A B C D
Transporta8on model
Total cost ($)
Aggregate benefit
Air Sea Rail & Ferry Road & Ferry
150,000 90,000 70,000 40,000
78 44 81 28
A,C,D: Efficient fron>er
A $150.000
D 7
$70.000
1
$40.000 ($150.000‐$40.000) = $2,200 (78‐28)
C 2 $70.000
($150.000‐$70.000) = $26,667 (81‐78)
D 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)
($70.000‐$40.000) = $567 (81‐28)
Sensi>vity Analysis
Weight placed on Punctuality
100
0
100 0
90
0
90 0
80
0
0 80 t
0
70 0 e n
0
b 0 60 f
0
50 0 e u
t fi e 70 n e b f 60 o e u 50 l a V 40
fi e
o
0
l a 0 40 V
30
0
30 0
20
0
20 0
101500 1500 0 1500 0 301500 1500 34,78 1500 1500 1500 1500 1500 1500 1500 1500 10 0 0 0 0 10 20 30 40 50 60 70 80 90 100 weight placed on
Weight placed on Punctuality 100
0
100 0
90
0
90 0
80
0
0 80 t
0
70 0 e n
t fi e 70 n e b f 60 o e u 50 l a V 40
fi
0
e b 60 f 0 o 0 e 50 l u a 0 40 V
30
0
30 0
20
0
20 0
0 0
101500 1500 0 1500 0 301500 1500 34,78 1500 1500 1500 1500 1500 1500 1500 1500 10 0 0 0 0 10 20 30 40 50 60 70 80 90 100
• •
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
Sensi>vity Analysis
Weight placed on Safety
100
0
100 0
90
0
90 0
80
0
0 80 t
0
70 0 e n
0
b 0 60 f
0
50 0 e u
t fi e 70 n e b f 60 o e u 50 l a V 40
fi e
o
0
l a 0 40 V
30
0
30 0
20
0
20 0
55,88 60 101500 1500 0 1500 1500 1500 0 1500 1500 1500 1500 1500 1500 1500 1500 10 0 0 0 0 10 20 30 40 50 60 70 80 90 100 weight placed on safety
Weight placed on Safety 100
0
100 0
90
0
90 0
80
0
0 80 t
0
70 0 e n
0
b 0 60 f
0
50 0 e u
t fi e 70 n e b f 60 o e u 50 l a V 40
fi e
o
0
l a 0 40 V
30
0
30 0
20
0
20 0
55,88 60 101500 1500 0 1500 1500 1500 0 1500 1500 1500 1500 1500 1500 1500 1500 10 0 0 0 0 10 20 30 40 50 60 70 80 90 100 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
Sensi>vity Analysis
Weight placed on Convenience
100
0
100 0
90
0
90 0
80
0
0 80 t
0
70 0 e n
0
b 0 60 f
0
50 0 e u
t fi e 70 n e b f 60 o e u 50 l a V 40
fi e
o
0
l a 0 40 V
30
0
30 0
20
0
20 0
101500 1500 0 1500 1500 1500 1500 1500 1500 1500 1500 1500 0 1500 1500 10 10 60 14,28 0 0 0 0 10 20 30 40 50 60 70 80 90 100 weight placed on
Weight placed on Convenience 100
0
100 0
90
0
90 0
80
0
80 t 0
0
70 0 e n
t fi e 70 n e b f 60 o e u 50 l a V 40
fi
0
e b 0 60 f o 50 0 e u l a 0 40 V
30
0
30 0
20
0
20 0
0 0
101500 1500 0 1500 1500 1500 1500 1500 1500 1500 1500 1500 0 1500 1500 10 10 60 14,28 0 0 0 0 10 20 30 40 50 60 70 80 90 100 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
Answers 1.
Rail & ferry has the highest value for aggregate benefits i.e. 81
2.
Rail ail & ferry erry (C) (C) and and Roa oad d & ferry erry (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.
#7.Decision Tree Case of Telemore Management of the Telemore Company is considering developing and marketing a new product. It is estimated to be 66.67% that the product would be successful. If it were successful, the expected profit would be $1,500,000. If unsuccessful, the expected loss would be $1,800,000. A marketing survey can be conducted as a cost of $100,000 to predict whether the product would be successful. Past experience with such surveys indicates if the survey shows favorable result, the product will be successful 80 percent of time. If the survey shows unfavorable result, the product will be unsuccessful 70 percent of time. The probability that the marketing survey show a favorable result is 50%. •Develop a decision tree for the problem. •Which is the best solution?
STEP 1 ‐ Generating Decision Tree Decision to go with the
Expected Value (EV)
Expected Value (EV)
MAX PROFIT
Payoff
Expected Value (EV)
MAX
80% Suce ss ssf ul ul
P( Su Su c | F av av)
$1,400,000 Product Development
$1,500,000
$740,000
$0
50% Favor Fa vorab able le P(Fav P(F av))
$1,400,000
20% Unsuccessful
P(Unsuc | Fav)
‐$1,900,000 1
‐$1,800,000
‐$1,900,000
$740,000
$0
No Product Development ‐$100,000 ‐$100,000
$0
Survey 30% ‐$100,000
$320,000
Suc Sucessf ess ful ul
P(Su P(Suc c | Unfa Unfav) v)
$1,400,000 Product Development $0
$1,500,000
‐$910,000
50% Unfavorable P(Unfav)
70% Unsuccessful
P(Unsuc | Unfav)
‐$1,900,000 2
$0
$1,400,000
‐$1,800,000
‐$1,900,000
‐$100,000
2
No Product De ve l opme nt
$400,110
‐$100,000
‐Please Choose
$0
‐$100,000
Without Survey‐
66.67% Sucessful $1,500,000 Product Development $0
$1,500,000 $400,110
$1,500,000
33.33% Unsuccessful
Wi thout Surve y
‐$1,800,000 1
$0
‐$1,800,000
‐$1,800,000
$400,110 No Product Development $0 $0
$0
Alterna8ve 1 (WITH SURVEY) Probability
Amount
Successful
0.6667
1,500,000
Unsuccessful
0.3333
(1,800,000)
P(favorable) P(unfavorable) P(successful) P(unsuccessful) P(Successful I favorable) P(Un Unssuccessful I favo avorabl able) P(successful I unfavorabl able) P(unsuccessful I unfavorable)
NO SURVEY NEEDED
= 0.5 = 0.5 = 0.6667 = 0.333 = 0. = 0.2 = 0.3 = 0.7
Alterna8ve 2 (WITHOUT SURVEY) Probability conducted 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
#8.Decision Tree Case 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 factory’s engineer has three immediate op>ons:
– Op3on 1: He can return the machine to the supplier who has agreed to collect, repair and return it free 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 any other 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 carry out the repair and they es>mate that there is a 30% chance that they will be able to return the machine 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 company’s repair >me will be unaffected by any work which the factory engineer has carried out. Assuming that the engineer’s objec>ve is to minimize expected costs, what course(s) of ac>on should he take?
SELF REPAIR $3070
#9.Decision Tree Case •
Westward Magazine Publishers are thinking of launching a new fashion magazine for women in the under‐25 age group. Their original plans were to launch in April of next year, but informa>on has been received 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 magazine throughout its life will be either high or low. If Westward launch before the rival, it is thought that there 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 Westward’s magazine was launched first. Westward’s accountants have es>mated that a high circula>on would generate a gross profit over the magazine’s 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 these gross 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 Westward’s problem and determine the policy that they should choose.
Launch in APRIL $3,000,5000
