Steve Gentry,the Operations Manager of Baja Fabricators,wants to Purchase a New

question 7

Essay

Steve Gentry,the operations manager of Baja Fabricators,wants to purchase a new profiling machine (it cuts compound angles on the ends of large structural pipes used in the fabrication yard).However,because the price of crude oil is depressed,the market for such equipment is down.Steve believes that the market will improve in the near future and that the company should expand its capacity.The table below displays the three equipment options he is currently considering,and the profit he expects each one to yield over a two-year period.The consensus forecast at Baja is that there is about a 30% probability that the market will pick up "soon" (within 3 to 6 months)and a 70% probability that the improvement will come "later" (in 9 to 12 months,perhaps longer). a.Calculate the expected monetary value of each decision alternative.
b.Which equipment option should Steve take?

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Definitions:

Raw Scores

The initial, unaltered scores obtained in an assessment before undergoing any transformation or normalization.

Test-retest Reliability

The consistency of a measure evaluated by testing the same individuals at two different points in time and comparing the scores.

NCE Type Scores

NCE Type Scores, or Normal Curve Equivalent scores, are standardized test scores that range from 1 to 99, representing a test taker's position relative to a norming group on a normal curve.

Internal Consistency

A measure of the reliability of a test or scale; assessing if various items that propose to measure the same general construct produce similar scores.