ACC544: Decisions Support and Tools Report - Boutique Catering

This report, prepared for ACC544, focuses on decisions support and tools within a business context, specifically for Boutique Catering. It begins by defining key business terms like optimistic, pessimistic, criterion of realism, equally likely, and minimax regret. The report then analyzes the expected value and variance related to the sale of frozen meals, concluding that an average of 4.5 meals per day would maximize profits. A memo to management advocates for investment in frozen meals, citing potential benefits like reduced waste and improved delivery times. The report also utilizes a decision tree to evaluate the investment in frozen meals, suggesting that the business should take the risk. Finally, the report examines the purchase of a conference center, assessing the optimal area to purchase based on different market scenarios using maximax, maximin, equally likely, and minimax decision criteria, and recommends purchasing a 50m2 conference area for a maximin decision.

Running head: ACC544 DECISIONS SUPPORT AND TOOLS
ACC544 Decisions support and tools
Name
Course Number
Date
Faculty Name

ACC544 DECISIONS SUPPORT AND TOOLS 2
Table of Contents
Abstract........................................................................................................................................2
Definition of terms...........................................................................................................................2
Frozen Meals...................................................................................................................................3
Expected value and variance of number of frozen meals sold.....................................................3
Memo...............................................................................................................................................4
Decision tree....................................................................................................................................5
Purchasing a conference centre.......................................................................................................5
Abstract
In business investment, sufficient information is needed to allow informed decisions. Surveys are
optimal in obtaining information for analysis prior resource allocation. Understanding the core
business terms is important to allow effective operations, hence directing the business operations
towards a defined goal. In this report, the main terms of business are defined followed by
detailed analysed regarding new potential investments for business expansion. In addition, a
memo to the management has been written to inform them about the new prospects of investing
in frozen meals. In conclusion, decision analysis performed for the case of purchasing a
conference room for the purpose of expanding the business.

ACC544 DECISIONS SUPPORT AND TOOLS 3
Decisions support and tools
Definition of terms
Optimistic – Being positive about future of the business. For instance, the business might
sometimes make losses and this should not a reason of pulling down. Losses are expected in
business by successful businesses are those that keep on even on such occasions.
Pessimistic – The term pessimistic means failing to appreciate good experiences, lack of believe
and believing that bad things will come to pass. For instance, if a business makes returns and a
person believe that businesses make losses, believing that the business will eventually make
losses is being a pessimist.
Criterion of realism – The criterion of realism is a phenomenon which considers the best and
worst scenario of a business and highlight possible success of a business. It done using a model
which calculates a weighted average value using alpha and 1−apha as weights for best and
worst scenario respectively. For example, if the best scenario is a business to make 1000 and 700
for the worst, the weighted average is calculated as 1000∗( alpha ) −700∗(1−alpha).
Equally likely – Equally likely should just be thought of as equal chances. For example being in
a business, profits and losses are equally likely to be experienced.
Minimax regret – The minimax regret is a strategy that focus on reducing greater losses
especially in business. It allows decision makers to consider chances of having a loss and how
much it affects a business then evaluates the best options. For example, if supplying 60 plates has
a maximum loss of $20 and supplying 40 has a maximum loss of $5 give a daily demand of 45,
then, choosing the latter is a good business decision (Zhang et al., 2009).

ACC544 DECISIONS SUPPORT AND TOOLS 4
Frozen Meals
Expected value and variance of number of frozen meals sold
Expected value ( E[ x])=∑ x∗P( x )
Variance=E [ x2 ] − ( E [ x ] ) 2 (Siegel, 2012)
Number of frozen meals Probability x*P(x) x2*p(x)
1 0.05 0.05 0.05
2 0.1 0.2 0.4
3 0.15 0.45 1.35
4 0.2 0.8 3.2
5 0.2 1 5
6 0.15 0.9 5.4
7 0.1 0.7 4.9
8 0.05 0.4 3.2
Expected value 4.5 23.5
Variance 3.25
Based on the available data of number of frozen meals in a day and probability of selling, the
expected average sale in a day would be 4.5 with a variance of 3.25. This means that having
approximately 4 or 5 frozen meals in a day would maximize the profits (Devore, Lee, Lee, &
Lee, 2006).

ACC544 DECISIONS SUPPORT AND TOOLS 5
Memo
MEMO: INVESTING ON DAILY FROZEN FOODS
This memo is a communication in regard to the business new investment considerations on
opting to venture into providing frozen meals. Investing into frozen food will not only minimize
resource wastage, it will also improve turn-around time to deliveries. The food preparations will
be prepared based on CSIRO Total Wellbeing recipe book, hence ensuring that quality of our
food products. Vegetarian and special diets including food for people with allergies will also be
included on top of the everyday food (Wyld, Harrison, & Noakes, 2010).
A survey was conducted to have an understanding of the visibility of the new possible business
venture and some data was collected. On average, the business will be able to sale approximately
4.5 pieces of frozen foods (Aczel & Sounderpandian, 2008). However, the number of frozen
foods sold in a day will vary by 2 more or less (Cohen, Manion, & Morrison, 2011). On my
opinion, I believe that this a good investment that Boutique Catering should venture into because
it has good prospects.
Yours’ Sincerely,
……….
Operations Manager
Boutique Catering

ACC544 DECISIONS SUPPORT AND TOOLS 6
Decision tree
criterion of realism=0.5∗200,000−0.5∗50,000
100,000−25,000=75,000
The business should take the risk of investing on frozen meals.
Purchasing a conference centre
Area of conference
center purchased
Strong
market
Average
Market
Weak
Market
Maximu
m
Minimu
m
50 100,000 40,000 -20,000 100,000 -20,000
100 160,000 60,000 -40,000 160,000 -40,000
150 100,000 60,000 -80,000 100,000 -80,000
200 400,000 50,000 -320,000 400,000 -320,000
1. Maximax decision – purchasing 200m2
2. Maximin decision – purchasing 50m2
Frozen Meals
0.5 0.5
Not-
Favorable
Favorable
Profit
$200,000
Loss
$50,000

ACC544 DECISIONS SUPPORT AND TOOLS 7
3. Equally likely decision - purchasing 100m2
4. Minimax decision - purchasing 150m2
Conclusion
In conclusion, frozen meals is a potentially profitable investment idea for Boutique Catering and
it should definitely be adopted. The 50m2 conference areas should be purchased for a Maximin
decision.

ACC544 DECISIONS SUPPORT AND TOOLS 8
References
Aczel, A. D., & Sounderpandian, J. (2008). Complete: Business Statistics. Association of
Business Information …. Retrieved from http://scholar.google.com/scholar?
hl=en&btnG=Search&q=intitle:McGraw-Hill/Irwin+=%3E?#1
Cohen, L., Manion, L., & Morrison, K. (2011). Descriptive Statistics. In Research methods in
education (pp. 622–640). https://doi.org/10.1213/ANE.0000000000002471
Devore, J., Lee, C.-F., Lee, J. C., & Lee, A. C. (2006). Statistics for Business and Economics.
The American Statistician (Vol. 60). https://doi.org/10.1198/tas.2006.s59
Siegel, A. F. (2012). Practical Business Statistics. Practical Business Statistics.
https://doi.org/10.1016/B978-0-12-385208-3.00014-6
Wyld, B., Harrison, A., & Noakes, M. (2010). The CSIRO total wellbeing diet book 1:
Sociodemographic differences and impact on weight loss and well-being in Australia.
Public Health Nutrition. https://doi.org/10.1017/S136898001000073X
Zhang, D., Baclawski, K. P., J. Tsotras, V., Wada, K., Green, T. J., Fan, W., … Francalanci, C.
(2009). Business Process Optimization. In Encyclopedia of Database Systems.
https://doi.org/10.1007/978-0-387-39940-9_2147