Decision Theory Exercise (1)

Play an AI-generated podcast conversation about this lesson

What is the best alternative based on the yield table for decision making under certainty?

Small facility for low demand, Medium facility for moderate demand, Large facility for high demand

How do you identify the best alternative using the expected monetary value (EMV) criterion for the given probabilities?

Calculate the expected value for each alternative by multiplying the probability of occurrence for each state of nature by the yield for that state of nature and summing them.

What are the strategies used for decision making under uncertainty?

a) Maximin, b) Maximax, c) Laplace

If the demand is known to be low, which facility should be elected based on the yields table?

Small facility Signup and view all the answers

What is the expected value (EV) calculation for the small facility under risk?

EV small = 0.3 ($10) + 0.5 ($10) + 0.2 ($10) Signup and view all the answers

What is the best alternative under risk based on the expected values for the given probabilities?

The alternative with the highest expected value based on the given probabilities Signup and view all the answers

According to the given information, which facility has the highest expected value?

Medium facility Signup and view all the answers

Using the maximin strategy, which facility is chosen to be built?

Small facility Signup and view all the answers

Based on the maximax criterion, which facility is recommended for construction?

Large facility Signup and view all the answers

What is the Laplace criterion for choosing the small facility?

$10 million Signup and view all the answers

Under the Laplace criterion, which facility is chosen?

Medium facility Signup and view all the answers

What is the payoff if the demand is high and the decision is made to build the small facility?

$55 thousand Signup and view all the answers

If demand is low and the decision is to build the large facility, what are the two choices and their respective yields?

Do nothing - $10, Reduce prices - $50 Signup and view all the answers

What is the expected value of the small facility if the probability of low demand is 0.4 and high demand is 0.6?

$49 thousand Signup and view all the answers

What is the expected value of the large facility if the probability of low demand is 0.4 and high demand is 0.6?

$62 thousand Signup and view all the answers

Which facility is recommended for construction based on the expected values?

Large facility Signup and view all the answers

What is the main goal of the Just-In-Time (JIT) system?

The main goal of the Just-In-Time (JIT) system is to eliminate wastes in all its forms by using the right part in the right place and at the right time to produce the parts in a timely manner to meet manufacturing needs. Signup and view all the answers

Who is credited with the emergence of the Just-In-Time (JIT) system in the Japanese industry?

The Just-In-Time (JIT) system emerged in the Japanese industry at Toyota motor company by Taiichi Ohno. Signup and view all the answers

How would you define the Just-In-Time (JIT) system?

Just-In-Time (JIT) system is the production system in which processing and movement of materials and goods happen on demand. Signup and view all the answers

What are the basic elements of the Just-In-Time (JIT) system?

The basic elements of the Just-In-Time (JIT) system include minimizing inventory storage to the extent necessary for flow production without suffocation, and ensuring that all operations take place at the time of need. Signup and view all the answers

What is the significance of minimizing inventory storage in the Just-In-Time (JIT) system?

Minimizing inventory storage is crucial in the Just-In-Time (JIT) system to ensure flow production without suffocation and to avoid causing a bottleneck. Signup and view all the answers

In what manner do the operations take place in the Just-In-Time (JIT) system?

In the Just-In-Time (JIT) system, all different operations take place at the time of need. Signup and view all the answers

What are the 4 main problems that occur when inventory increases?

a. Inventory is subjected to aging. b. Inventory is subjected to limited techniques. c. Increased inventory retention costs. d. Financial suffering due to placing part of the capital in the value of this inventory, which leads to borrowing. Signup and view all the answers

What is the positive impact of regularity and stability of production scheduling?

Reduces total operating time, reduces costs, achieves Just – In – Time system, and reduces waiting time. Signup and view all the answers

What benefits are yielded by requiring small lot sizes from the supplier in a JIT system?

Reduces inventory, less space required to store inventory, less rework if defects occur, problems are more apparent, and no financial suffering. Signup and view all the answers

How does reducing machine setup time impact production under the JIT system?

It reduces the cost of machine setup, reduces lost time, and increases efficiency. Signup and view all the answers

What is the advantage of sorting the factory by product in terms of speed and space?

It increases the speed of deposit and retrieval, leading to rapid response to demand, and reduces the area of the factory and establishment. Signup and view all the answers

How does using computer-aided design for small sub-assembly design impact JIT?

It ensures avoiding errors, defects, and re-work. Signup and view all the answers

What is the emphasis of effective preventive maintenance programs in the context of JIT?

Maintaining equipment in good operating condition. Signup and view all the answers

What is the JIT philosophy based on in terms of production batch size?

Production in small batches. Signup and view all the answers

What is the goal of reducing the setup time under the JIT system?

To earn employees a high degree of skill in preparation, increase efficiency, and reduce costs. Signup and view all the answers

How does sorting the factory by product lead to a small area of the establishment?

It increases the speed of deposit and retrieval, leading to the rapid response to demand, which results in a smaller area of the establishment. Signup and view all the answers