strategic decision making case assignments

7/23/2019 Strategic Decision Making Case Assignments

1/33

Case Assignments

MM5010 Strategic Decision Making andNego8a8on

29111311 Haidir Afesina (fezi)

2911132 Hendra Winata

29111329 Mita Listyatri

2911133 Andek Prabowo

29111344 Aprian Eka Rahadi

2911134 Chairunnisa Mirhelina

2911137 Franciscus Xaverius Kresna Paska

29111393 Agung Indri Pramantyo


2/33


3/33

Iden8fy Concerns Set Priority ProcessMajor Concern Subconcern Timing Trend Impact Ac8on

neededPrevent more oil

from spilling Number of damageCompartments H L H DATanker slipping off M H H PPA

Dispersing Spilledoil

Environmental

concerns H H H DAAvailability of

Chemical H L M PAContaining Oil

spill Floa>ng Booms H H H PAProtec>ng Fisheries H H H DA

Protec>ng Island

Shore L M L DA

#1. Exxcon Valdez

Situa>on Analysis


4/33


5/33

Iden8fy Concerns Set Priority ProcessMajor Concern Subconcern Timing Trend Impact Ac8on

neededTom`s work Projects H M H PA

New Job M L M DA

Financialproblems

Braces for kids L M M DA

New car M H H DA

Paint house L M M DA

Water leak in

basement

M M M PA/DA

Sara ge[ng a job Managing children L L H PA/DA

Finding part >me

job

L L H DA

#2. The ADAMS Family

Situa>on Analysis


6/33

PROBLEM ANALYSIS

PRIMARY

A new alloy in zeniths sheetsteel is causing excessive

burning in the presses

SECONDARY

Burger decided to let the directorwas accused of drinkingemployees

Lack of discipline Workers strict inspec>on whethersomeone deliberately

Worker strike to go get a newcontract

All execu>ve agree Factoryprocessing capacity and laborproblems, in addi>on toproducing

The need of training to improveemployee moral


7/33

#3. KT Problem AnalysisDevia>on : Excessive rejects from buring on quarter panels

Is Is not dis8nc8on cause

WHATdevia8on

object

Burrs

Panther panels

Any other complaints

cheetah panels

Deep draw

WHEREon object

observed

Panther panels

Lines 1,2, & 4

Other parts line 3 Deep draw

WHENon object

observed

Line 2 (09.33 AM)

Line 1 (10.1 AM)

Line 4 (11.23 AM)

Any burrs before

these 8mes on line

2,1 & 4

Line 3 at any 8me

Stacks of Zenith

blanks began to be

used at this 8me

New alloy in Zenith

steel

EXTENDHow Much

How many

Bad burring

Line 2: 11% reject

Line 1: 10% reject

Line 4: 15% reject

Line 3 reject

Reject rates not propor8onal to involvement

in FarrelValen8 conflict

Possible cause fortest A new alloy in zeniths sheet steel is causing excessive burning in the presses


8/33

Oh, Nuts!!! *

The NutsnBolts Auto Parts Company manufactures and distributes auto parts throughout the United States. Over a period ofseveral months, they have been receiving a large number of complaints about corroded bolts from consumers. Virtually all of the

complaints were received between June and August. There were a few complaints during some of the other months, but almost

none in January and February.In addi>on to its manufacturing plant in Detroit, NutsnBolts has four major distribu>on centers in Atlanta, Phoenix, Denver, and

Houston, where shipments from Detroit are stored in warehouses. There seems to be a strong geographical pa]ern to thecomplaints with respect to where shipments originated. A majority of the complaints came from shipments from the regions in

Houston and Atlanta. Virtually no complaints came from the centers at Denver and Phoenix. Sampling indicates that not every

part from any given shipment is corroded; only some of the parts, some of the >me, from certain geographical loca>ons. Also,due to excellent quality control, virtually no product leaves the plant with any signs of corrosion.

The parts are packaged in cardboard boxes, with cardboard placed in between layers of bolts to act as a shock absorber. A few

years ago paper was supplied exclusively by Wolverine Paper, whose plant is located near Lake Superior in Michigan. The newlyappointed manager in the NutsnBolts packaging department noted that Wolverine Paper was overcharging for their product

and decided to look into other suppliers.The best price offered by far (almost 20% cheaper than the next lowest bid) was from Acadia Paper, located in Maine. Research

into how Acadia was able to provide such a low bid yielded the following informa>on. The plant was intended to produce highgrade paper, but the water intake for the mill is located in a >dal basin, allowing seawater to enter the processing water supply.

Because of this, only lowgrade paper can be produced at the plant. In order to get rid of their excess lowgrade paper, Acadia

began offering packaging paper well below the market price.

The manager also set up a contract with Badger Paper, whose plant is located near Lake Michigan in Wisconsin. Badger hadrecently been fined by the Environmental Protec>on Agency for dumping excessive waste in Lake Michigan. As a result, severalchanges in Badgers produc>on were made to stay within the EPAs waste limits. This resulted in a decrease in the overall paper

quality. In addi>on to these two suppliers, NutsnBolts s>ll purchased some of its paper from Wolverine Paper Co. Current prices

offered by the paper companies determine which companys paper ends up as packaging material for any batch of product.A confounding factor is that NutsnBolts has no>ced that the quality of the steel to make bolts provided by Heavy Metal has

decreased substan>ally aer several key personnel re>red. On one occasion Heavy Metal tried to supply materials that arrivedexhibi>ng excessive amounts of corrosion. The president of NutsnBolts had the shipment sent back to Heavy Metal and

threatened to pull the account. Aer this, there were two other similar incidents of corroded Heavy Metal materials reported.


9/33

#4. Nuts & Bolts KT Problem AnalysisDevia>on : What causes the corrosion in the product

Is Is not dis8nc8on cause

WHAT Corroded product Non corrodedproduct

Corrosion Salt

WHERE In Atlanta andHouston

Badger or AcadiaPlant

Denver and Phoenix

Wolverine Plant

Type of climate

Salt in AcadiaNo salt in badger orWolverine

Effect of humidity oncorrosion

Tidal basin

contamina>on

WHEN Summer

Aer new paper

companies added

Winter

Before new paper

companies added

Temperature andhumidity

Different paper

companies process

Moist paper

Salt in paper

EXTEND Some of the product

All bolts in shipment

All of the product

All bolts in boxes

Different paper forpackaging

Something contac>ng

surface of all bolts

Different papercompanies

Packaging material

Possible cause fortest

Salt in paper is moving onto parts through water from humid air


10/33

Ragin Cajun Chicken* Wes Thompson is a manager of a Burgermeister restaurant, which specializes in fast

food hamburgers. He has just been notified by the corporation that a new chickensandwich, called Ragin Cajun Chicken, will be introduced into Burgermeisterrestaurants in two weeks. This surprised Wes because he has never heard anythingabout the new sandwich from the company or from advertisements. The memo saysthat plans for a national advertising campaign have unfortunately been delayed untilafter the introduction of the sandwich.

The memo also says that next week, Wess restaurant will receive a shipment of 500Ragin Cajun Chickens. These are shipped frozen and have a shelf life of threemonths in the freezer. The notification also stresses the importance of properhandling of the uncooked chicken. In order to prevent cross-contamination bysalmonella, the bacteria present in some raw chicken, specially marked tongs will beused to handle only uncooked chicken.

With the shipment of the chicken, Wess restaurant will receive a new broiler to beused exclusively for the new sandwich. It is important that the broiler operate at leastat 380F to ensure that the chicken will be fully cooked in the five-minute preparationtime.

Wes thought that it was very important that the transition run smoothly when RaginCajun Chicken would be added to the menu in two weeks. To prevent any problems,he noted concerns in four areas and constructed the following PPA table.

h k


11/33

#5. Rajun chickenPoten>al Problem Analysis

Poten8al Problem Consequence Possible cause Preven8ve ac8on Con8gent ac8on

People dont buy

sandwich

Restaurant losses

money

Customers dont know

about sandwichToo expensive

Food too spicy

Make own signs for

sandwich

Compare unit cost

with compe>>on

Inform customers ofmild variety

Have cashiers suggest

chicken to customersRun promo>onal

specials

Run promo>onalspecials

Bacteria in food Illness, lawsuits Employees dont handle

raw chicken properly

Improper use of broiler

Chicken stored too long

Freezer not cold enough

Train employees

Train employees

Set up da>ng system

Perform temperature

checks

Perform periodic

inspec>ons

Perform periodic

inspec>ons

Inspect and discardchicken if necessary

Inspect and discard

chicken if necessary

Substandardsandwich quality

Customers complain,no return business

Wrong items onsandwich

Sandwich sits too long

under heat lamps

Have cashiers doublecheck accuracy

Mark discard >mes on

sandwich

Provide free remadesandwiches for affected

customers

Inspect sandwiches

before serving

Substandard andservice quality Customers complain,no return business Sandwich prepara>ontakes too long Always have chickenprecooked Have sandwichpremade


12/33

A Bri>sh company has won an important contract to supply components regularly to

Poland. Four methods of transport are being considered: (i) air, (ii) sea, (iii) road and

ferry, and (iv) rail and ferry. The companys distribu>on manager has iden>fied four

relevant a]ributes for the decision:punctuality, safety of cargo, convenience, and costs.She has also allocated weights of 30 to punctuality, 60 to safety of cargo, and 10 to

convenience.

The manager then rated the performance of each form of transport on the different

a]ributes. The values she assigned are shown below together with the es>mated annual

cost of using each form of transport.

a. Determine the form of transport which has the highest valued overall benefits,assuming that mutual preference independence exists between the a]ributes.

b. For each form of transport, plot the value of overall benefits against costs and henceiden>fy the forms of transport which lie on the efficient fron>er.

c. If the manager would be prepared to pay $ 70,000 per year to move from the leastsafe to the most safe form of transport (all else remaining equal), determine whichalterna>ve she should select.

#6. SMART Case of Transporta>on


13/33

Stage 1

& 2

Decision Maker Manager from Bri8sh company

Alterna>ve courses Air

Sea

Road & ferry

Rail & ferry

Parameter Sub Parameter

Benefit Punctuality

Safety

Convenience

Stage 3

Form oftransport

Benefit Costs ($)Punctuality Safety Convenience

Air 100 70 60 150,000

Sea 0 60 80 90,000

Road & ferry 60 0 100 40,000

Rail & ferry 70 100 0 70,000

Stage 4

S


14/33

Stage 5

Stage 6

Aribute Weigh8ng

Punctuality

Safety

Convenience

30%

60%

10%

TOTAL 100%

Aribute Weigh8ng Air Sea Road&ferry

Rail & ferry

Punctuality

Safety

Convenience

30%

60%

10%

100

70

60

0

60

80

60

0

100

70

100

0

Aggregate benefit 7 44 2 1

Benefits

Punctuality Safety

Costs

Convenience

Value Tree


15/33

Transporta8onmodel

Total cost ($) Aggregatebenefit

AB

C

D

AirSea

Rail & Ferry

Road & Ferry

150,00090,000

70,000

40,000

7844

81

28

Stage 7

A,C,D: Efficient fron>er


16/33

A D

$150.000 7 $70.000 1

C

$40.000($150.000$40.000) = $2,200

(7828)

($70.000$40.000) = $567

(8128)2

D

$70.000($150.000$70.000) = $26,667

(8178)1

Decision maker`s extra value: $70,000/60 = $1,166.67

Decision maker compare C&D

*if extra value point < $567 C (Rail & Road)

*if extra value point $567 D (Rail & )Decision maker compare C&A

*if extra value point < $2,200 C (Rail & Road)

*if extra value point $2,200 A (Air)

Decision maker compare A&D

*if extra value point < $26,667 D (Rail & ferry)

*if extra value point $26,667 A (Air)


17/33

Sensi>vity Analysis

i h l d li


18/33

Weight placed on Punctuality

70 80 90 10060

150015001500150015001500150015001500150015001500

0 10 20 30 40 50

0

10

20

30

40

50

60

70

80

90

100

0

0

0

0

0

0

0

0

0

0

0

Valueofbenefit

weight placed onpunctuality

1500 0

0

0

0

0

0

0

0

0

0

10

20

30

40

50

60

70

80

90

100

0

Valueofbenefit

34,7830


19/33

Weight placed on Punctuality

As long weight of punctuality < 34,78 then Rail and Ferry is the most a]rac>ve When weight of punctuality 34,78 then Air is the most a]rac>ve

70 80 90 10060

150015001500150015001500150015001500150015001500

0 10 20 30 40 500

10

20

30

40

50

60

70

80

90

100

0

0

0

0

0

0

0

0

0

0

0

Value

ofbenefit

1500 0

0

0

0

0

0

0

0

0

0

10

20

30

40

50

60

70

80

90

100

0

Value

ofbenefit

34,7830


20/33

Sensi>vity Analysis


21/33

Weight placed on Safety

70 80 90 10060

150015001500150015001500150015001500150015001500

0 10 20 30 40 50

0

10

20

30

40

50

60

70

8090

100

0

0

0

0

0

0

0

0

00

0

Valueofbenefit

weight placed on safety

1500 0

0

0

0

0

0

0

0

0

0

10

20

30

40

50

60

70

80

90

100

0

Valueofbenefit

55,88 60


22/33

Weight placed on Safety

As long weight of safety < 55,88 then Air is the most a]rac>ve When weight of safety 55,88 then Rail and Ferry is the most a]rac>ve

70 80 90 10060

150015001500150015001500150015001500150015001500

0 10 20 30 40 50

0

10

20

30

4050

60

70

80

90

100

0

0

0

0

00

0

0

0

0

0

Valueofbenefit

weight placed on safety

1500 0

0

0

00

0

0

0

0

0

10

20

30

40

50

60

70

80

90

100

0

Valueofbenefit

55,88 60


23/33

Sensi>vity Analysis


24/33

Weight placed on Convenience

70 80 90 10060

150015001500150015001500150015001500150015001500

0 10 20 30 40 50

0

10

20

30

40

50

60

70

8090

100

0

0

0

0

0

0

0

0

00

0

Valueofbenefit

weight placed onconvenience

1500 0

0

0

0

0

0

0

00

0

10

20

30

40

50

60

70

8090

100

0

Valueofbenefit

14,2810 60


25/33

Weight placed on Convenience

As long weight of convenience < 14,28 then Rail and Ferry is the most a]rac>ve If weight of convenience (x) = 14,28 < x < 60 then Air is the most a]rac>ve When weight of convenience 60 then Road and Ferry is the most a]rac>ve

70 80 90 10060

150015001500150015001500150015001500150015001500

0 10 20 30 40 50

0

10

20

30

40

50

60

70

80

90100

0

0

0

0

0

0

0

0

0

00

Valueofbenefit

weight placed onconvenience

1500 0

0

0

0

0

0

0

0

00

10

20

30

40

50

60

70

80

90

100

0

Valueofbenefit

14,2810 60


26/33

Answers

1. Rail & ferry has the highest value for aggregate benefits i.e. 81

2. Rail & ferry (C) and Road & ferry (D) lie of the efficient fron>er

3. The decision: The manager is prepared to pay $1167 for each extra benefit point ($70 000/60).A switch from road/ferry to rail/ferry would cost $567 for each extra benefit point

($30,000/53) and is therefore worth making. Therefore choose rail/ferry.

The manager is prepared to pay $1167 for each extra benefit point ($70 000/60).A switch from rail/road to Air would cost $2,200 for each extra benefit point ($110,000/50)

and is therefore worth making. Therefore choose rail/road.

The manager is prepared to pay $1167 for each extra benefit point ($70 000/60).A switch from rail/ferry to Air would cost $26,667 for each extra benefit point ($80,000/3)

and is therefore worth making. Therefore choose rail/ferry.


27/33

Management of the Telemore Company is considering developingand marketing a new product. It is estimated to be 66.67% that theproduct would be successful. If it were successful, the expectedprofit would be $1,500,000. If unsuccessful, the expected losswould be $1,800,000. A marketing survey can be conducted as a

cost of $100,000 to predict whether the product would besuccessful. Past experience with such surveys indicates if thesurvey shows favorable result, the product will be successful 80percent of time. If the survey shows unfavorable result, the productwill be unsuccessful 70 percent of time. The probability that themarketing survey show a favorable result is 50%.

Develop a decision tree for the problem.Which is the best solution?

#7.Decision Tree Case of Telemore


28/33

Decision to go with the

MAX PROFITExpected Value (EV)

Expected Value (EV)

MAXExpected Value (EV) Payoff

80%

Suce ssf ul P( Su c | F av)

$1,400,000

Product Development $1,500,000 $1,400,000

$0 $740,000 20%

50% Unsuccessful P(Unsuc | Fav)

Favorable P(Fav) $1,900,000

1 $1,800,000 $1,900,000

$0 $740,000

No Product Development

$100,000

$0 $100,000

Survey

30%

$100,000 $320,000 S ucess fu l P (S uc | U nfav )

$1,400,000Product Development $1,500,000 $1,400,000

$0 $910,000 70%

50% Unsuccessful P(Unsuc | Unfav)

Unfavorable P(Unfav) $1,900,000

2 $1,800,000 $1,900,000

$0 $100,000

2 No Product Development

$400,110 $100,000

$0 $100,000

66.67%

Sucessful

$1,500,000

Product Development $1,500,000 $1,500,000

$0 $400,110 33.33%

Unsuccessful

Without Survey $1,800,000

1 $1,800,000 $1,800,000

$0 $400,110

No Product Development

$0

$0 $0

Please Choose

Without Survey

STEP 1 Generating Decision Tree


29/33

Alterna8ve 1 (WITH SURVEY)

Probability Amount

Successful 0.6667 1,500,000

Unsuccessful 0.3333 (1,800,000)

Alterna8ve 2 (WITHOUT SURVEY) Probabilityconducted show favorable 0.

Favorable Unfavorable

Successful 0.4 0.15 0.6667

Unsuccessful 0.1 0.35 0.3333

TOTAL 0.5 0.5 1

P(favorable) = 0.5P(unfavorable) = 0.5

P(successful) = 0.6667

P(unsuccessful) = 0.333

P(Successful I favorable) = 0.P(Unsuccessful I favorable) = 0.2P(successful I unfavorable) = 0.3

P(unsuccessful I unfavorable) = 0.7

NO

SURVEYNEEDED


30/33

A large machine in a factory has broken down and the company that owns the factory will incur costs of

$3200 for each day the machine is out of ac>on. The factorys engineer has three immediate op>ons:

Op3on 1: He can return the machine to the supplier who has agreed to collect, repair and return itfree of charge, but not to compensate the company for any losses they might incur while the repair

is being carried out. The supplier will not agree to repair the machine if anyother person has

previously a]empted to repair it. If the machine is returned, the supplier will guarantee to return it

in working order in 10 days >me.

Op3on 2: He can call in a specialist local engineering company. They will charge $20 000 to carryout the repair and they es>mate that there is a 30% chance that they will be able to return themachine to working order in 2 days. There is, however, a 70% chance that repairs will take 4 days.

Op3on : He can a]empt to carry out the repair work himself, and he es>mates that there is a 50%chance that he could mend the machine in 5 days. However, if at the end of 5 days the a]empted

repair has not been successful he will have to decide whether to call in the local engineering

company or to make a second a]empt at repair by inves>ga>ng a different part of the mechanism.

This would take 2 further days, and he es>mates that there is a 25% chance that this second

a]empt would be successful. If he fails at the second a]empt, he will have no alterna>ve other

than to call in the local engineering company. It can be assumed that the probability distribu>on

for the local engineering companys repair >me will be unaffected by any work which the factory

engineer has carried out.

Assuming that the engineers objec>ve is to minimize expected costs, what course(s) of ac>on should he

take?

#8.Decision Tree Case


31/33

SELF

REPAIR

$3070


32/33

Westward Magazine Publishers are thinking of launching a new fashion magazine for women in theunder25 age group. Their original plans were to launch in April of next year, but informa>on has beenreceived that a rival publisher is planning a similar magazine. Westward now have to decide whether

to bring their launch forward to January of next year, though this would cost an addi>onal $500 000. If

the launch is brought forward it is es>mated that the chances of launching before the rival are about

80%. However, if the launch is not brought forward it is thought that there is only a 30% chance of

launching before the rival.

For simplicity, the management of Westward have assumed that the circula>on of the magazinethroughout its life will be either high or low. If Westward launch before the rival, it is thought thatthere is a 75% chance of a high circula>on. However, if the rival launches first, this probability is

es>mated to be only 50%. If the rival does launch first then Westward could try to boost sales by

increasing their level of adver>sing. This would cost an extra $200 000, but it is thought that it would

increase the probability of a high circula>on to 70%. This increased adver>sing expenditure would not

be considered if Westwards magazine was launched first. Westwards accountants have es>mated

that a high circula>on would generate a gross profit over the magazines life>me of $4 million. A low

circula>on would bring a gross profit of about $1 million. It is important to note, however, that thesegross profits do not take into account addi3onal expenditure caused by bringing the launch forward or

by increased adver>sing.

Draw a decision tree to represent Westwards problem and determine the policy that they shouldchoose.

#9.Decision Tree Case


33/33

Launch in

APRIL

$3,000,5000

strategic decision making case assignments

Documents