Trey Leeman,Operations Manager at National Consumers,Inc

question 52

Multiple Choice

Trey Leeman,Operations Manager at National Consumers,Inc.(NCI) ,is evaluating alternatives for increasing capacity at NCI's Fountain Hill plant.He has identified four alternatives,and has constructed the following payoff table which shows payoffs (in $1,000,000's) for the three possible levels of market demand. If Trey uses the Hurwicz criterion with alpha = 0.1,the appropriate alternative would be: _____________.

• A)Lease New Equipment
• B)Purchase New Equipment
• C)Add Third Shift
• D)Do Nothing
• E)Do everything

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Definitions:

Weighted Average

A calculation method that accounts for the varying degrees of importance or weights of different elements in a dataset, often used in financial metrics and inventory costing.

Moving Average

A moving average is a statistical method used to analyze data points by creating a series of averages of different subsets of the full data set.

Net Method

An accounting method of recording purchases at the net of any trade discounts and rebates.

Purchase Discounts Lost

Occurs when a company fails to take advantage of early payment discounts offered by suppliers, leading to higher purchase costs.