Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Zambeef company is facing challenges of low supply of its beef products due to increased demand in three townships in Lusaka namely; Kuku, Mandevu

The Zambeef company is facing challenges of low supply of its beef products due to increased demand in three townships in Lusaka namely; Kuku, Mandevu and Chawama .Consequently, management is considering increasing production using one of the three alternatives A (Work overtime), B (Install new Equipemnt) and C (Rent a Machine).The demand for the three alternatives; is 20,000, 35,000 and 65,000 has a demand probability ratios of 0.5, 0.3 and 0.2 respectively. The fixed cost per month as calculated by the Finance team is given as Work Overtime(23,000), Installation of the Equipment (87,500) and Renting a machine (42,000).Subsequently the variable costs are 9, 7 and 8, respectively.The price per unit on all options is 20.The Project Manager upon receipt of this information, he/she must do some risk analysis using the decision tree to come up with the best option to meet the market demand. Note that the given figures came up after some accounting computation process. Required: Compute the Risk Analysis using decision tree method with the parameters given by the Project Accountant. Calculate the following: a) Profit per demand level (3 marks) b) Expected value (2 marks) c) Total Value (2 marks) d) Which option is the best? (3 marks) e) What does a Sensitivity Analysis plot show? And outline its limitations in project analysis.. (4 marks) f) In reference to the case study given above, what is a risk management technique? Explain its risk implication on this case. (4 marks) g) Describe what Corporate governance is in relation to the Zambeef case study. (2 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Intelligence

Authors: Efraim Turban, Ramesh Sharda, ...more

2nd Edition

013610066X, 9780136100669

More Books

Students also viewed these General Management questions