Exhibit 10-1 a Company Is in the Planning Phase of Constructing a Constructing

question 29

Essay

Exhibit 10-1
A company is in the planning phase of constructing a new production facility. It wants to build a simulation model for the economics of the facility, and one key uncertain input is the construction cost. For each of the scenarios in the questions below, choose an "appropriate" distribution, together with its parameters, and explain your choice.
-Refer to Exhibit 10-1.A little later on,management still believes the upper and lower bounds for the costs are $5M and $8M,but now they can also state that "we believe the most likely value is about $6.5M."

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Definitions:

Conventional Level

The second level in Kohlberg's theory of moral development, where individuals make moral decisions based on conforming to social rules to ensure positive relationships and societal order.

Social Rules

Norms established by a society to dictate acceptable behavior, facilitate interaction, and maintain order among its members.

Preoperational Stage

A stage in Jean Piaget's theory of cognitive development (roughly ages 2 to 7) where children begin to engage in symbolic play and struggle with logic and taking the perspective of others.

Decentration

The ability to consider multiple aspects of a situation simultaneously, an important cognitive development in children allowing more complex thought processes.