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Need help developing Decision Tree for the problem below with Excel add-in TreePlan, Analytic solver, precision tree, etc Tim's Optimal Composite Systems (TOCS), a manufacturer
Need help developing Decision Tree for the problem below with Excel add-in TreePlan, Analytic solver, precision tree, etc
Tim's Optimal Composite Systems (TOCS), a manufacturer of lightweight hobby aircraft made from special composite materials, is deciding whether to enter competition to be a supplier for a proposed DoD program that will utilize mini-UAVs for surveillance operations. In order to compete, TOCS must design a test fixture for the production process and produce ten prototype fuselages that DoD will use during feasibility testing. The cost of development, that is, designing and building the test fixture ($10,000) and the initial ten fuselages ($4,000 each), is $50,000. If TOCS wins the contract, an event estimated as occurring with probability 0.2, they will build 1,000 fuselages for DoD at a delivered price of $1250 each (total value of the contract is $1.25M). If TOCS does not get the contract, the development cost is essentially lost. In order to produce the fuselages, TOCS may either use its current molding machines or buy a new molding machine. Re-tooling of the current machines will cost $120,000 and the per-unit production cost will be $250. However, if TOCS uses its current machines, it may incur overtime costs (based on previous production experiences). The relationship between overtime costs and the status of TOCS other business is presented in the table below. The new molding machine costs $450,000. However, with the new mold, TOCS would reduce the impact of overtime costs, and the fuselage production cost would be only $100 per unit. Other Business Probability of Other Business Level Overtime Cost to TOCS (new mold) Heavy Normal Light 0.3 0.6 Overtime cost to TOCS (current mold) $500,000 $200,000 $40,000 $125,000 $50,000 0 Tim's Optimal Composite Systems (TOCS), a manufacturer of lightweight hobby aircraft made from special composite materials, is deciding whether to enter competition to be a supplier for a proposed DoD program that will utilize mini-UAVs for surveillance operations. In order to compete, TOCS must design a test fixture for the production process and produce ten prototype fuselages that DoD will use during feasibility testing. The cost of development, that is, designing and building the test fixture ($10,000) and the initial ten fuselages ($4,000 each), is $50,000. If TOCS wins the contract, an event estimated as occurring with probability 0.2, they will build 1,000 fuselages for DoD at a delivered price of $1250 each (total value of the contract is $1.25M). If TOCS does not get the contract, the development cost is essentially lost. In order to produce the fuselages, TOCS may either use its current molding machines or buy a new molding machine. Re-tooling of the current machines will cost $120,000 and the per-unit production cost will be $250. However, if TOCS uses its current machines, it may incur overtime costs (based on previous production experiences). The relationship between overtime costs and the status of TOCS other business is presented in the table below. The new molding machine costs $450,000. However, with the new mold, TOCS would reduce the impact of overtime costs, and the fuselage production cost would be only $100 per unit. Other Business Probability of Other Business Level Overtime Cost to TOCS (new mold) Heavy Normal Light 0.3 0.6 Overtime cost to TOCS (current mold) $500,000 $200,000 $40,000 $125,000 $50,000 0
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