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- This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
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- May 22, 2019 at 2:35 pm #516871AnonymousInactive
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Hello Sir!
I got a bit confused with the term uncertainty to the context of this question.Shifters Haulage (SH) is considering changing some of the vans it uses to transport crates for customers. The new
vans come in three sizes; small, medium and large. SH is unsure about which type to buy. The capacity is 100
crates for the small van, 150 for the medium van and 200 for the large van.
Demand for crates varies and can be either 120 or 190 crates per period, with the probability of the higher demand
the figure being 0·6.
SH has in the past been very aggressive in its decision-making, pressing ahead with rapid growth strategies.
However, its managers have recently grown more cautious as the business has become more competitive.
Profits table
Small van Medium van Large van
Capacity 100 150 200
Low demand (120 crates) 300 468 368
High demand (190 crates) 300 500 816Which one of the following would reduce the level of uncertainty for SH in their decision-making process?
A Expected value analysis
B Market research
C Sensitivity analysis
D Relevant Costingthe correct answer is market research. Market research could be used to obtain data about customer/consumer attitudes. This could help reduce the uncertainty for some elements of decision making.
why not sensitivity analysis?
please do help me out with this Sir! Thanks in advance.
May 22, 2019 at 2:59 pm #516880Sensitivity does not reduce the uncertainty. It simply gives a measure of how critical the uncertainty is to the decision. The uncertainty still remains!
May 22, 2019 at 3:21 pm #516886AnonymousInactive- Topics: 22
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Thank you for your explanation!
May 23, 2019 at 8:08 am #516963You are welcome 🙂
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