Question

As a chief industrial engineer in a manufacturing facility, you are contemplating the replacement of the spreadsheet procedures that you are now using for production scheduling and inventory control with a material requirements planning system. A number of options are available. You can do it all at once and throw out the old system; you can phase in the new system over time; you can run both systems simultaneously, and so on. Identify the costs, benefits, and risks with each approach. Construct a decision tree for the problem. Assume that the benefits of any option depend on the future state of the economy which may be “good” or “bad” with probabilities 0.7 and 0.3, respectively.

Answer 1