QNI - SE1 Week 3 Individual Assignment Solutions Case 1 : Decision - Making under Uncertainty - Expansion Strategy The Bell Computer Company is considering a plant expansion that will enable the company to begin production of a new computer product . You have obtained your ME A from the University* of Phoenix and as a vice - president you must determine whether to make the expansion a medium - or large - scale project . The demand for the new product involves an uncertainty , which for planning purposes may be low demand , medium demand , or high demand . The probability* estimates for the demands are 0. 20 , 0.50 , and 0. 30 , respectively . The film's planners developed profit forecasts for the medium - and large - Scale expansion projects as given on the Excel file* spreadsheet named Case 1 . Compute the expected value for the profit associated with the two expansion alternatives . Which decision is preferred for the objective of maximizing the expected profit ?" The expected profit for the medium - scale expansion is $145 , 000 and the expected profit for* the large - scale expansion is $140, 0010 . Based on expected profits alone , the medium - scale* expansion yields a maximum profit . Compute the variation for the profit associated with the two expansion alternatives . Which decision is preferred for the objective of minimizing the risk of uncertainty ?" The medium - scale expansion offers a lower risk , so it is preferred . Data and template are provided on the Excel spreadsheet Case I Case 2 : Establishing a Reorder Point ( Normal Distribution ) In this case , Kyle Bits and Bytes , a retailer of computing products sells a variety of computer - related products . One of Kyle's most popular products is an HP laser printer . The average weekly demand is 200 . Lead time ( Lead time is defined as the amount of time between when the order is placed and when it is delivered . ) for a new order from the manufacturer to arrive is 1 week . If the demand for printers were constant , the retailer would reorder when there were exactly 200 printers in inventory . However , Kyle learned in his Operations Management class that the demand is a random variable . An analysis of previous week's reveals that the weekly demand standard deviation is 30 . Kyle knows that if a customer wants to buy an HP laser printer but he* has none available , he will lose that sale plus possibly additional sales . He wants the probability* of running short ( stock - out ; in any week to be no more than 596 . What should be the reorder point set at ? In other words , how many HIP laser printers should he have in stock when he reorders from the manufacturer ?" Page 1 Of 2