BUSI 2301 Lecture Notes - Lecture 3: Semi-Continuity, Absenteeism

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14 Sep 2016
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Decision trees: draw decision tree, assign probabilities to the states of nature, estimate payoffs for each possible combination of decision alternatives and states of nature, working from right to left, calculate ev for each state of nature (circular node, chose the alternative with the highest ev (or lowest expected cost) for each decision point (square node) Capacity planning process: forecast demand for products 1 to 5 years, determine capacity requirements, measure the capacity now and decide how to bridge the gap in the future, generate feasible alternatives (ppe, lease, size, price changes, evaluate each alternative considering economic( annual revenues, op. expenses and use. Developing capacity alternatives: design flexibility into systems, differentiate between new(higher risk) and mature products(more predictable,less risk, take a big picture approach to capacity changes(consider how parts interrelate, prepare to deal with capacity chunks , attempt ro smooth out capacity requirements(avoid unevenness in capacity, use capacity cushion excess of capacity over average demand.

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