Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You have been asked to be the project manager on a performance improvement project at a car manufacturing plant. After assessing various project alternatives, the
You have been asked to be the project manager on a performance improvement project at a car manufacturing plant. After assessing various project alternatives, the project team has selected a project which involves upgrading the machinery in the car production line. You have negotiated with the equipment provider to install the new equipment and lease it to the company for $1,000,000 a year. According to forecasts, the equipment upgrade should allow the company to produce an additional 1,000 cars each year. You know from sales planning that each car sold by our normal resellers will provide a profit of $2,000 . If a car is manufactured but not sold, it can later be sold at cost price (zero profit). You and your team are conducting the initial risk assessment for the project and have identified the risks and risk mitigation strategies contained in the table below. From a quick review you are not satisfied that the mitigation strategies are suitable. As project leader you decide to review the existing identified risk plan but note that the team will need to conduct a more thorough risk management process before proceeding with the project. Risk 1 - There is a 10% chance that market demand for our cars will drop and we will only be able to sell an additional 500 cars per year Treatment 1 - Share Risk: We should enter a forward contract with the car retailers. They agree to buy all our additional 1,000 cars at a reduced price, resulting in an profit of $750 per car rathe
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started