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9 marksDecision Making

CAPE Management of Business Unit 1 · 2006 · Paper 2 · Question 2(a)(i)

John, the Production Manager of Carib Incorporated, is choosing between locating a production plant in Moonlight Island or Sunny Isle, with given probability distributions for demand levels and associated payoffs.

Draw a Decision Tree to illustrate the given scenario.

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Other parts of this question

  1. 2(a)(ii)(a)Calculate the expected value for Moonlight Island.[2 marks]
  2. 2(a)(ii)(b)Calculate the expected value for Sunny Isle.[2 marks]
  3. 2(a)(iii)Recommend to John the country in which he should locate the production plant, and explain why.[2 marks]
  4. 2(b)(i)Define "Network Analysis".[2 marks]
  5. 2(b)(ii)Outline two advantages and two disadvantages of using Critical Path Analysis as a decision-making tool.[8 marks]

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