System Design & Engineering

SYSTEM DESIGN & ENGINEERING
[Author Name(s), First M. Last, Omit Titles and Degrees]
[Institutional Affiliation(s)]

Question 1
Given that;
We will have to make an assumption for the anticipated impact
High-100k
Medium-75k
Low-50k
Also, assuming that risk is a negative impact on the outcome (Friedman, Hendry & Borning,
2017)
Using the anticipated value method, the following are calculated
C1:340k*60%+100k*10%-50k*30%=199k
C2: 180k*60%+75k*10%-30k*30%=88.5k
C3: 270k*60%+50k*10%-20k*30%=161k
C4: 360k*60%+100k*10%-70k*30%=219k
Since expect risk for C4 is highest, it will be chosen assumption set 2
Assuming the following values for impact
High-10k
Medium-7.5k
Low-5k
C1:190, C2:99.75, C3: 156.5 and C4:196

In this case still, C4 is preferred
Question 2
(I)
a Hurwitz payoff Strategy
0.00 25.0 M3
0.05 25.8 M3
0.10 26.5 M3
0.15 27.3 M3
0.20 28.0 M3
0.25 28.8 M3
0.30 29.5 M3
0.35 30.3 M3
0.40 31.0 M3
0.45 31.8 M3
0.50 32.5 M3
0.55 33.3 M3
0.60 34.0 M3
0.65 34.8 M3
0.70 36.5 M2
0.75 38.8 M2
0.80 41.0 M2
0.85 43.3 M2
0.90 45.5 M2
0.95 47.8 M2

1.00 50.0 M2
(ii) As it can be noted from the graph, a 0.50, M3 tends to be the most preferred strategy
Question 3
Given that
Manufacturing part of internet of tea maker, a hydraulic press is used (Laplander, 2017)
Cost=900000
Add estimate life=30 years
Salvage value=0
Operating value=750000
Required $10,000
(a) The add-on is installed
=750000-10000=740000