Question
M & M Chemicals Inc is a supplier of chemicals and equipment for industrial processes. One of its products is the High Tech-7 (HT-7) for
M & M Chemicals Inc is a supplier of chemicals and equipment for industrial processes. One of its products is the High Tech-7 (HT-7) for which they normally maintain inventories every week of 11, 12 or 13 boxes of 10 packs of 50 flue ounces. For each box sold you get a utility as indicated in the table below. Because the HT-7 is very unstable, it has a very short life and if a box has not been sold at the end of the week, it should be decommissioned. Since its cost is as indicated in that table, a loss of exactly that amount is incurred if there is a need to remove the box. The probability of selling 11 boxes is 0.45, for 12 boxes it is .35 and for 13 boxes it is .20.
Utility per box | Cost per box |
$35 | $56 |
- Prepare a decision table.
- Which course of action is the most recommended?
- A product that stabilizes HT-7 is being developed and in that case there is no need to remove the excess product at the end of the week, How does the recommended course of action change?
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