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# Operations Management case

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Complete questions 1-3.

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I'm need assistance with case questions 1-3. If I could figure out what is considered High or low maybe I can figure it out, but I'm have a lot of difficulty with this one.
Expected Value
Large Facility 700000
180000
880000

Small facility 500000

Small facility + expansion 560000
150000
710000

Q1
He should give greater priority to moving into a larger facility immediately. This has been decided by calculating the expected value. The calculations show expected value for larger facility, smaller facility, and smaller facility with expansion. For example the larger facility shows a probability of 0.7 multiplied with \$1000, 000. Plus 0.3 multiplied by \$600,000. The total is \$880,000. Since moving to a larger facility immediately has the greatest expected value, we give a higher weight to facility with excess capacity. We give a weight of 20 to factor 3 and 10 to factor 4.
#1 #2 #3
Factor1 20 5 100 4 80 4 80
Factor 2 30 6 180 2 60 5 150
Factor3 20 6 120 5 100 0 0
Factor4 10 0 0 1 10 5 50
Factor5 10 5 50 4 40 4 40
Factor6 10 3 30 4 40 4 40
100 25 480 20 330 22 360

2.
If we simply multiply the weights with each rating and calculate a composite score for each location the highest score is obtained by location #1. The score is 480.
Alternative Analysis
#1 #2 #3
Factor1 20 5 100 4 80 4 80
factor 2 30 6 180 2 60 5 150
Factor3 10 6 60 5 50 0 0
Factor4 20 0 0 1 20 5 100
Factor5 10 5 50 4 40 4 40
Factor6 10 3 30 4 40 4 40
100 25 420 20 290 22 410

3.
If I had selected a different capacity alternative that would have changed the weights for factor 3 and factor 4. This change will affect the composite score for each location but if I had given the weights of 10 and 20 to factor 3 and factor 4 instead of 20 and 10, even then the results would not have been different. Location 1 would have been selected. The composite score for location 1 would have become 430 instead of 480 but the choice would still have been location 1.
References:
1. www.dartmouth.edu/~chance/teaching_aids/books.../Chapter6.pdf
2. www.thefreedictionary.com/expected+value
3. www.cardschat.com/poker-odds-expected-value.php

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