An automobile collision business has had steady growth over the last four years The shop owner is contemplating several different scenarios for the next three years Recently he has been overbooked and shorthanded The owner identified three possible options to increase sales 1) expand the existing building and hire two technicians 2) add a second shift of two technicians 3) Plan to commence expansion proceedings in three years The owners have made the following assumptions Giving the current level of clients, the probability of success is 75 Assume all dollar values given are net present value Success due to expanding workspace and hiring two more technicians forecast $200,000 earnings per year An unsuccessful outcome anticipates $ 70,000 in earnings per year Success based on the second shift and two additional technicians increases annual revenues to $ 150,000 An unsuccessful forecast would result in revenues of $100,000 Remain at current level success would yield $100,000 in revenues and $60,000 revenues with the expectation of an unsuccessful forecast Estimated Costs 1) Expansion costs $80,000 plus additional technicians $45,000 2) Second shift costs additional technicians $ 45,000 each and additional utility expense $2,000 annually 3) Do nothing No additional costs Develop a Decision Tree for this shop owner A coffee roaster packages coffee for two nationally known brands in two sizes one pound bags and single serve cups The company currently has 2 machines to package the one pound bags Each one pound packaging machine can produce 300,000 bags per year, requiring 3 operators per machine Also, the company has 3 machines designed for package single serve cups Each single serve processing machine can produce 450,000 per year requiring 4 operators per machine Determine the equipment and labor requirements to meet the demand for the next three years Round intermediate answers to 3 decimals Show work for full credit Year 1 Year 2 Year 3 Brand 1 One pound Bags 300,000 320,000 355,000 Single serve Cup 390,000 400,000 420,000 Brand 2 One pound Bags 300,000 325,000 370,000 Single serve Cup 425,000 430,000 435,000

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An automobile collision business has had steady growth over the last four years. The shop owner is contemplating several different scenarios for the next three

An automobile collision business has had steady growth over the last four years. The shop owner is contemplating several different scenarios for the next three years. Recently he has been overbooked and shorthanded. The owner identified three possible options to increase sales 1) expand the existing building and hire two technicians 2) add a second shift of two technicians 3) Plan to commence expansion proceedings in three years.

The owners have made the following assumptions:

Giving the current level of clients, the probability of success is 75%.
Assume all dollar values given are net present value.
Success due to expanding workspace and hiring two more technicians forecast $200,000 earnings per year. An unsuccessful outcome anticipates $ 70,000 in earnings per year.
Success based on the second shift and two additional technicians increases annual revenues to $ 150,000. An unsuccessful forecast would result in revenues of $100,000.
Remain at current level success would yield $100,000 in revenues and $60,000 revenues with the expectation of an unsuccessful forecast.

Estimated Costs:

1) Expansion costs $80,000 plus additional technicians $45,000.

2) Second shift costs additional technicians $ 45,000 each and additional utility expense $2,000 annually.

3) Do nothing - No additional costs.

Develop a Decision Tree for this shop owner

A coffee roaster packages coffee for two nationally known brands in two sizes one-pound bags and single-serve cups. The company currently has 2 machines to package the one-pound bags. Each one-pound packaging machine can produce 300,000 bags per year, requiring 3 operators per machine. Also, the company has 3 machines designed for package single-serve cups. Each single-serve processing machine can produce 450,000 per year requiring 4 operators per machine. Determine the equipment and labor requirements to meet the demand for the next three years. Round intermediate answers to 3 decimals. Show work for full credit.

Year 1 Year 2 Year 3

Brand 1
One-pound Bags	300,000	320,000	355,000
Single-serve Cup	390,000	400,000	420,000
Brand 2
One-pound Bags	300,000	325,000	370,000
Single-serve Cup	425,000	430,000	435,000