A major hypermarket is considering the future for its warehousing and distribution facilities. It has decided that it needs to build a new facility but having looked at the procurement strategies has difficulty choosing between the Traditional, Design and Build and Partnering approaches. It has further decided that, initially, the decision should be based purely on cost. The retailer has identified 4 sets of market conditions that could face them over the life of the facility: minor contraction, unchanged, minor growth and major growth. It is unable to decide which will occur but, after study, has suggested that their probabilities of occurrence are 0.1, 0.3, 0.4 and 0.2 respectively. An independent consultant has been employed to investigate costs of procuring the facility in the various possible ways. The report provided by the consultant suggests that the costs are likely to be as shown in Table Q.2. All the figures in Table Q.2 are in millions of pounds. Unchanged Minor growth Minor contraction Major growth Market / procurement strategy Traditional Design and Build Partnering 190 200 204 220 198 216 216 224 240 232 220 228 (a) Produce a pay-off matrix for the decision problem faced by the hypermarket and evaluate it by at least 5 methods (b) Suggest which procurement strategy the hypermarket should adopt. Give your reasons. (c) Comment on whether such a single-stage single-criterion decision process is sensible for such a problem. A major hypermarket is considering the future for its warehousing and distribution facilities. It has decided that it needs to build a new facility but having looked at the procurement strategies has difficulty choosing between the Traditional, Design and Build and Partnering approaches. It has further decided that, initially, the decision should be based purely on cost. The retailer has identified 4 sets of market conditions that could face them over the life of the facility: minor contraction, unchanged, minor growth and major growth. It is unable to decide which will occur but, after study, has suggested that their probabilities of occurrence are 0.1, 0.3, 0.4 and 0.2 respectively. An independent consultant has been employed to investigate costs of procuring the facility in the various possible ways. The report provided by the consultant suggests that the costs are likely to be as shown in Table Q.2. All the figures in Table Q.2 are in millions of pounds. Unchanged Minor growth Minor contraction Major growth Market / procurement strategy Traditional Design and Build Partnering 190 200 204 220 198 216 216 224 240 232 220 228 (a) Produce a pay-off matrix for the decision problem faced by the hypermarket and evaluate it by at least 5 methods (b) Suggest which procurement strategy the hypermarket should adopt. Give your reasons. (c) Comment on whether such a single-stage single-criterion decision process is sensible for such a
