A Petrochemical Company Must Decide Whether to Fill a Specialty

question 45

Essay

A petrochemical company must decide whether to fill a specialty order for one of its customers. Its cost (and therefore profit) depends on the quality of the raw material it has on hand to make the chemical. The firm expects to earn $50,000 from the order if the material is high quality (H) but will lose $30,000 if it is low quality (L). The firm's engineers estimate these probabilities to be .32 and .68 respectively. Before making its decision, the firm can test the material with one of two outcomes, "favorable" or "unfavorable." A favorable test increases the chance of H to .5, while an unfavorable result reduces it to .2. The likelihood of a favorable test is .4. Determine the expected value of this test.

Identify the role and procedures of the NLRB in conducting representation elections and deciding on bargaining units.

Grasp the significance and implications of specific NLRB rules, such as the provision of the Excelsior list.

Understand the various methods through which unions can be recognized, including card check agreements.

Describe the standard criteria used by the NLRB in determining the appropriateness of bargaining units.

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Definitions:

Activity-based Management

An approach to business management focusing on identifying and managing activities that drive costs and improve business processes and profitability.

Process Costing

An accounting methodology used to allocate costs to units of production in continuous or mass production processes.

Customer Value

Customer value is the perception of benefits received by a customer from a product or service compared to the costs and alternatives, often influencing purchasing decisions.

Throughput Efficiently

The rate at which a system achieves its goal, especially in terms of processing work or information within a given period of time.