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Quantitative Analysis | Assignment | EMV
10 Pages1342 Words246 Views
Added on 2020-02-17
Quantitative Analysis | Assignment | EMV
Added on 2020-02-17
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Quantitative Analysis
Table of ContentsINTRODUCTION......................................................................................................................3a. Assessing the value of for the purpose of minimization of expected total cost.................3b. Identifying strategy that Sharp Outfits should pursue to minimize expected cost.............4c. Finding EVSI and EVI when value of probability is 0.05.................................................6d. Calculating and interpreting EVPI when P equals to 0.05.................................................7CONCLUSION..........................................................................................................................7REFERENCES...........................................................................................................................8
INTRODUCTIONQuantitative analysis lays emphasis on finding suitable solution from the largenumeric data set. There are several tools such as EMV (expected monetary value) which inturn helps in evaluating the outcomes associated with each decision (Andronis & Barton,2016). The present report is based on the case scenario of Sharp Outfits which will shed lighton the manner EMV helps in selecting the best outcome from other available alternatives. a. Assessing the value of for the purpose of minimization of expected total cost Given case situation shows that if Sharp Outfits take decision in relation to deliveringmerchandise when UPS strike takes place then it may result into cost of $60000. On the otherside, in the case of no strike business unit has to incur $4000 as shipping cost. Besides this, ifowner of Sharp Outfits take decision in relation then cost will be $10000 due to delay. Undersuch situation, cost will not be affected irrespective the aspect that UPS goes on strike. Byconsidering such scenario following tables have been prepared:Cost tableGiven that:Probability Strike No strike occurs Ship now0.750.25Postpone shipment 0.150.85EMV analysis when merchandise is shipping now by Sharp outfits Situation Cost ProbabilityEMV(Probability* cost)strike$600000.75$45000no strike$40000.25$1000Total $46000EMV analysis when shipping merchandise is postponed by Sharp outfits Decision Strike No strike occurs Ship now600004000Postpone shipment 1000014000
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