Solutions Operations management

Solution) Joe is going to invest $250,000 in the development of new products. The new products have the follow

Question: Joe is going to invest $250,000 in the development of new products. The new products have the following expected costs, yields, and degrees of risk.

	Expected	Expected	Expected
Product	Cost	Yield	Risk
A	$100,000	0.20	8
B	$50,000	0.10	4
C	$50,000	0.15	10
D	$150,000	0.10	0

Joe can do each product at its full cost or he may attempt a partial development and still expect a yield proportional to the level of expenditure on the product. Joe wants to limit his total weighted risk (degree of risk times budgeted amount) to 1,000,000 units; that is, an adopted plan for a $10000 expenditure with a degree of risk of 7 would be 70000 risk

units. What should Joe invest to net the highest yield given his risk constraints?

Price: $2.99

Solution: The solution consists of 2 pages
Solution Format: Word Document