Deborah Kellogg buys Breathalyzer test sets for the Montreal Police Department. The quality of the test sets
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For example, the probability of getting a batch of tests that are 1% defective from Loomba Technology is 0.70. Because Kellogg orders 10 000 tests per order, this would mean that there is a 0.7 probability of getting 100 defective tests out of the 10 000 tests if Loomba Technology is used to fill the order. A defective Breathalyzer test set can be repaired for $0.50. Although the quality of the test sets of the second supplier, Stewart-Douglas Enterprises, is lower, it will sell an order of 10 000 test sets for $37 less than Loomba.
a) Develop a decision tree.
b) Which supplier should Kellogg use?
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Related Book For
Operations Management Sustainability and Supply Chain Management
ISBN: 978-0133764345
2nd Canadian edition
Authors: Jay Heizer, Barry Render, Paul Griffin
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