Deborah Kellogg buys Breathalyzer test sets for the Montreal Police Department. The quality of the test sets

Question:

Deborah Kellogg buys Breathalyzer test sets for the Montreal Police Department. The quality of the test sets from her two suppliers is indicated in the following table:

Probability for Loomba Probability for Stewart-Douglas Enterprises Percent Defective Technology 0.70 0.30 0.30 0.20 0.10


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?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Operations Management Sustainability and Supply Chain Management

ISBN: 978-0133764345

2nd Canadian edition

Authors: Jay Heizer, Barry Render, Paul Griffin

Question Posted: