Review of the Decision Process Jocelyn Franklin has just graduated from college near the top of her class with a degree in management. Her grandfather is so proud of her that he rewards her with a cash gift of

$100,000. Jocelyn is ambitious and is determined to succeed, but she quickly needs to make a decision. Although she has a number of good job opportunities, she has narrowed the alternatives under consideration to two. She has been offered a job as an assistant store manager at Worthington’s World of Values (WWYV), a local discount megastore, starting at $40,000 per year, with good opportunities for advancement. If she takes that job, she will put the

$100,000 from her grandfather in the bank to earn 5 percent annual interest.

On the other hand, Jocelyn has always been somewhat of a free spirit, and a little risk has always been exciting to her. Also, she prefers to be her own boss. Her friend André

Preneur started his own business several years ago. His business has been very successful, and he now is looking for an additional supplier of one of the elements of his product. If Jocelyn is interested, André will purchase all of the counter-hardened extrusalized bermits she can produce.

The special machines needed to produce the bermits cost

$50,000 each and are expected to last for 20 years. Not having established her credit, Jocelyn is unable to borrow money to purchase the machines, but she can use the

$100,000 her grandfather gave her. If Jocelyn purchases 2 of the machines, she can produce 40,000 bermits per year, and André will purchase them for $5 each. Her cost for materials, employees, rent, utilities, repairs, and other items she figures will be about $95,000 per year, but she will not have to pay these costs until the cash starts rolling in from André. Of course, if André’s business falls off, Jocelyn will be in big trouble unless she can find another customer, which would be difficult unless the economy was exceptionally strong.

Tired of living on a student’s budget, Jocelyn decides she needs at least $45,000 a year before taxes to get her started living in the style to which she wants to become accustomed. Faced with an important decision, Jocelyn settles back to think this one over. She thinks back to one of her early management classes that taught her the structure of the decision process, and she begins to organize her thinking about the decision at hand.

a. Identify the primary alternatives available to Jocelyn.

b. From what you know about Jocelyn, construct her set of values and preferences related to the decision at hand and reasonable criteria for making the choice between Jocelyn’s primary alternatives.

c. List the available information useful for the decision.

d. Identify the steps in the decision-making process that Jocelyn should take.

e. Given the information that is available, which alternative do you think Jocelyn will choose? Why?