1. Zingtronics Corp. has completed the design of a new graphic-display unit for computer systems and is about to decide on whether it should produce one of the major components internally or subcontract it to another local firm. How the market will respond to the new product dictates which action to take. If demand is high, then it is worthwhile to make the extra investment for special facilities and equipment needed to produce the component internally. For low demand it is preferable to subcontract. The analyst assigned to study the problem has produced the following information on costs (in thousands of dollars) and probability estimates of future demand for the next 5-year period: a) Draw a decision tree that describes this problem b) Based on the expected costs, what should Zingtronics do?
2. A consulting company trying to win a major contract from a large educational institution for their infrastructure redesign is concerned with four major threats. a. Competition: the probability of very competitive bids is high at 0.6 and the potential impact would be substantial at a value of 5 on a scale of 1 7 (where 7 is a major negative threat and a 1 is slight) b. Economy: probability of a recession is 0.4 and its impact would be 7 since the institution would probably decide not to move ahead with the project. c. Chance of a loss: a small probability of only .3 with a negative impact of 4. d. Succession Change: (Those in decision-making positions may be reassigned): probability of loss is 0.5 but negative impact is only 3. Use the FMEA technique to determine which risks are critical and which can be ignored. Rank the risks from most critical to least critical

\begin{tabular}{|l|l|l|l|} \hline \multirow{2}{*}{ Action } & \multicolumn{3}{|c|}{ Future Demand } \\ \cline { 2 - 4 } & Low & Average & High \\ \hline Produce & $140 & $120 & $90 \\ \hline Subcontract & $100 & $110 & $160 \\ \hline Probability & 0.1 & 0.6 & 0.3 \\ \hline \end{tabular}