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A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand

A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand proves to be? excessive, the second machine can be purchased later. Some sales will be? lost, however, because the lead time for producing this type of machine is six months. In?addition, the cost per machine will be lower if both are purchased at the same time. The probability of low demand is estimated to be .30 The? after-tax net present value of the benefits from purchasing the two machines together is $?90,000 if demand is low and $190,000 if demand is high. If one machine is purchased and demand is? low, the net present value is $100,000 If demand is? high, the manager has three options. Doing nothing has a net present value of ?$100,000 ?subcontracting, ?$130,000 and buying the second? machine, 120,000. Please answer Question B.) With explanation. The correct decision tree has already been chosen What should management do to achieve the highest expected? payoff? The management should build a ? small facility medium facility large facility in order to achieve the highest expected payoff of

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Jul 25 2020 View more View Less

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