Smart Steering Support Essay

4256 Words Jun 12th, 2013 18 Pages
Final Report

Smart Steering Support

Prepared By:

Nipun Lavoie

February 24, 2011

Industrial Engineering 417: Operations Research II

TABLE OF CONTENTS

1. Problem Statement ……………………………………….3 - 7 2. Assumptions ……………………………………………...8

3. Definitions ………………………………………..............9

4. Decision Tree (Manual)…………………………………..10

5. Decision Tree (WinQSB) ………………………………...11

6. Decision Tree Analysis …………………………………..12

7. Explanation of Decision Tree…………………………….13

8. Sensitivity Analysis - Probability of Research Success …14

9. Sensitivity analysis - Selling price of DSS……………....15

10. Utility Decision
…show more content…
She still remembers the disaster with Brian’s last project, the fingerprint-based car security system. After spending half a million dollars, the development engineers concluded that it would be impossible to produce the security system at an attractive price.

Brian senses Julie’s hostility and shoots back: “In engineering we are quite accustomed to these success rates— something we can’t say about marketing . . . .”

“What would be the next step?” intervenes Marc.

“Hmm, sorry. If the research is not successful, then we can only sell the DSS in its current form.”

“The profit estimate for that scenario is $2 million,” Julie throws in.

“If, however, the research effort is successful, then we will have to make another decision, namely, whether to go on to the development stage.”

“If we wouldn’t want to develop a product at that point, would that mean that we would have to sell the DSS as it is now?” asks Max.

“Yes, Max. Except that additionally we would earn some $200,000 from selling our research results to GM. Their research division is very interested in our work and they have offered me that money for our findings.”

“Ah, now that’s good news,” remarks Julie.

Brian continues, “If, however, after successfully completing the research stage, we decide to develop a new product then we’ll have to spend

Related Documents