Question 3 - Probability concepts (15 marks)

Pandora Chocolates is investigating the option to expand the production of chocolates to include 250g blocks of chocolate. The objective would be to increase market share as opposed to making a profit.

After conducting an online survey of club members, a probability table of likely sales was created.

Number of blocks sold per day	Probability
10	0.1
11	0.1
12	0.1
13	0.2
14	0.25
15	0.15
16	0.1

Required:

1. What is the expected value and variance of chocolate blocks sold? (5 marks)
2. Dottie and Lottie still have concerns over the introduction of blocked chocolate. They have requested a second analysis as they believe there is a 50-50 chance the blocked chocolate will be successful. If the demand for blocked chocolate is favorable, Pandora Chocolates could realise an annual profit of $50,000. If the market is not favorable, they will lose $20,000 or they could do nothing. Construct a decision tree to help analyse the problem. (5 marks)
3. Prepare a one-page memo for management explaining and analysing the results. In your explanation advise management on the best outcome. (5

Question 4 - Forecasting techniques (10 marks)

Pandora Chocolates would like to see more certainty in determining whether blocked chocolate should be introduced into the product range. Based on general chocolate sales, the below monthly table captures actual sales, which is a strong indicator of demand for blocked chocolate sales.

Monthly	Actual chocolate sales
Jan.	8
Feb.	6
Mar.	10
Apr.	15
May	14
June	16
July	20
Aug.	15
Sept.	17
Oct.	12
Nov.	13
Dec.	16

Required:

1. Develop a 3-month moving average forecast, calculating the MAD. (3 marks)
2. Develop a 4-month moving average forecast, calculating the MAD. (3 marks)
3. In your response explain MAD to Dottie and Lottie and which forecast method is more suited. (4 marks) (max 150 words)

Question 5 - Project Management (15 marks)

Dottie and Lottie would like a feasibility study carried out to move the production plant to a vacant block of land in a new estate. Major tasks have been identified and normal time and cost estimates have been obtained from the architect.

Task	Task description	Time (days)	Cost ($)	Crash time (days)	Crash cost ($)
0-1	Building of frames	10	12,000	8	15,000
0-2	Excavation and foundations	16	20,000	12	27,000
1-3	Installation of frames	12	15,000	10	20,000
2-4	External walls built	10	35,000	10	35,000
3-4	Internal walls erected	8	13,000	4	17,000
3-5	Roof framing and laying	14	12,000	10	18,000
4-5	Plumbing works and fixtures	10	24,000	8	36,000
4-6	Electrical fixtures and fittings	6	17,000	4	24,000
5-7	Sealing of rood, including guttering	6	7,000	6	7,000
6-7	Final site fixtures and fittings	2	16,000	2	16,000

Required:

1. Draw a network diagram (using a computer program) and identify the pathways and critical path. (5 marks
2. Determine the cheapest method of completing the project in the shortest time possible. (5 marks)
3. Dottie and Lottie would like to go ahead and construct the plant. Identify 5 factors that should be taken into consideration before commencing. Use the information provided in the case study as a starting point. (max 300 words) (5 marks)