A large machine in a factory has broken down and the company that owns the factory will incur costs of $3200 for each day the machine is out of action.

A large machine in a factory has broken down and the company that owns the factory will incur costs of $3200 for each day the machine is out of action. The factory’s engineer has three immediate options:

Option 1

He can return the machine to the supplier who has agreed to collect, repair and return it free of charge, but not to compensate the company for any losses they might incur while the repair is being carried out. The supplier will not agree to repair the machine if any other person has previously attempted to repair it. If the machine is returned, the supplier will guarantee to return it in working order in 10 days’ time.

Option 2

He can call in a specialist local engineering company. They will charge $20 000 to carry out the repair and they estimate that there is a 30% chance that they will be able to return the machine to working order in 2 days. There is, however, a 70% chance that repairs will take 4 days.

Option 3

He can attempt to carry out the repair work himself, and he estimates that there is a 50% chance that he could mend the machine in 5 days. However, if at the end of 5 days the attempted repair has not been successful he will have to decide whether to call in the local engineering company or to make a second attempt at repair by investigating a different part of the mechanism. This would take 2 further days, and he estimates that there is a 25% chance that this second attempt would be successful. If he fails at the second attempt, he will have no alternative other than to call in the local engineering company. It can be assumed that the probability distribution for the local engineering company’s repair time will be unaffected by any work which the factory engineer has carried out.

Assuming that the engineer’s objective is to minimize expected costs, what course(s

find the cost of your paper

Strategic Management Project

Assignment Content Review the Strategic Management Project Background and your strategic management research journal entries from Weeks 1–4. Create a 10-slide presentation for Caterpillar Inc. leadership in which you summarize your key findings, propose….

Case Problem Investment Strategy

Case Problem Investment Strategy J. D. Williams, Inc. is an investment advisory firm that manages more than $120 million in funds for its numerous clients. The company uses an asset allocation model that recommends the portion of each client’s portfolio to be invested in a growth stock fund, an income fund and a money market fund. To maintain diversity in each client’s portfolio, the firm places limits on the percentage of each portfolio that may be invested in each of the three funds. General guidelines indicate that the amount invested in the growth fund must be between 20% to 40% of the total portfolio value. Similar percentages for the other two funds stipulate that between 20% to 50% of the total portfolio must be in the income fund and at least 30% of the total portfolio value must be in the money market fund.   In addition, the company attempts to assess the risk tolerance of each client and adjust the portfolio to meet the needs of the individual investor. For example, Williams just contracted with a new client who has $800,000 to invest. Based on an evaluation of the client’s risk tolerance, Williams assigned a maximum risk index of 0.05 for the client. The firm’s risk indicators show the risk of the growth fund at 0.10, the income fund at 0.07 and the money market fund at 0.01. An overall portfolio risk index is computed as a weighted average of the risk rating for the three funds where the weights are the fraction of the client’s portfolio invested in each of the funds. Additionally, William’s is currently forecasting annual yields of 18% for the growth fund, 12.5% for the income fund and 7.5% fir the money market fund. Based on the information provided, how should the new client be advised to allocate $800,000 among the growth, income and money market funds? Develop a linear programming model that will provide the maximum yield for the portfolio. Use your model to develop a managerial report.   Managerial Report: a.Recommend how much of the $800,000 should be invested in each of the three funds. What is the annual yield you anticipate for the investment recommendation change? b.Assume that the client’s risk index could be increased to 0.055. How much would the yield increase and how would the investment recommendation change? c.Refer again to the original situation where the client’s risk index was assessed to be 0.05. How would your investment recommendation change if the annual yield for the growth fund were revised downward to 16% or even to 14%? d.Assume that the client expressed some concern about having too much money in the growth fund. How would the original recommendation change if the amount invested in the growth fund is not allowed to exceed the amount invested in the income fund? e.The asset allocation model you developed may be useful in modifying the portfolios for all the firm’s clients whenever the anticipated yields for the three funds are periodically revised. What is your recommendation as to whether use of this model is possible?  

Case Analysis

You can view the article (the case), “The Man Who Got Honeywell’s Groove Backt”, by linking to the course EReserves  Follow the Case Analysis Outline given in your syllabus. This is….