Week 2 . Spring 2 2011. Intro to Decision Making. Decision Analysis. Payoff Table - craps tables Maximax - maximum of maximum payoffs - optimistic - “hard ways” Maximin - maximum of minimum payoffs - safe bets or even odds bets
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States Of Nature
Decision a b
1 Payoff 1/a Payoff 1/b
2 Payoff 2/a Payoff 2/b
Good Foreign Poor Foreign
DECISION Competitive Conditions Competitive Conditions
Expand $ 800,000 $ 500,000
Maintain status quo 1,300,000-150,000
Sell now 320,000 320,000
Maximums: 1,300,000; 800,000, 320,000
Minimums: 500,000; 320,000; -150,000
Product or service concept
Revising and testing prototypes
Manufacturing or delivery specifications
New product or service launch
and final tests
& process plansThe Design Process
1. Identify the Hazards
2. Assess hazards to determine risks.
3. Develop controls and make risk decisions.
4. Implement controls.
5. Supervise and evaluate.
From FM 100-14
How will it look?
Preferred solution = cross functional teams
Is there value added?
1. Can we do without it?
2. Does it do more than is required?
3. Does it cost more than it is worth?
4. Can something else do a better job
5. Can it be made by less costly method, tools, material?
6. Can it be made cheaper, better or faster by someone else?Should we contract it out?
Barrier to Make-or-Buy?
“Low-Cost Country Sourcing Success Strategies: Maximizing and
Sustaining the Next Big Supply Savings Opportunity,” Jun 2005
Risk and uncertainty
Piecemeal analysis – “one piece at
Part No. 52074
Assembly No. 520
Oper. No. Description Dept. Machine/Tools Time
10 Pour in plastic bits 041 Injection molding 2 min
20 Insert mold 041 #076 2 min
30 Check settings 041 113, 67, 650 20 min & start machine
40 Collect parts & lay flat 051 Plastics finishing 10 min
50 Remove & clean mold 042 Parts washer 15 min
60 Break off rough edges 051 Plastics finishing 10 minOperations Process Chart
Location: Graves Mountain
Process: Apple Sauce
Unload apples from truck
Move to inspection station
Weigh, inspect, sort
Move to storage
Wait until needed
Move to peeler
Apples peeled and cored
Soak in water until needed
Place in conveyor
Move to mixing area
Weigh, inspect, sort
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190 ftProcess Flowchart