Scenario 6.1 - the Big Box

question 62

Multiple Choice

Scenario 6.1 - The Big Box
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.
-Use the information from Scenario 6.1 to determine the expected cost of operating a large facility for two years.

• A)$810,000
• B)$450,000
• C)$405,000
• D)$2,810,000

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Definitions:

Perfect Indicators

Measures or signals that perfectly predict or reflect the true state of a condition or phenomenon; however, in practice, perfect indicators are extremely rare.

Coherent Personality

The state of having an integrated and consistent sense of self, where various aspects of personality function harmoniously.

Personality Parts

Components or aspects that make up an individual's overall personality, suggesting a multifaceted nature of personality with different elements interacting with each other.

One Big Theory

An overarching theory that attempts to explain a large array of related concepts and phenomena within a given field.