Assignment:
A factory can produce three models of their product: A, B and C. The raw materials used to produce each model is bought from three suppliers: X, Y, Z. The decision is made according to different factors including: the availability of all raw materials in the supplier side, the total cost, the delivery time, etc.. The table below shows the cost (in thousands) to produce each of the three models next month. Suppose you are asked to answer the question: which model should be produced to eliminate the cost for the next month. Answer the following questions based on the data provided in the table:
|
A
|
B
|
C
|
|
X
|
5
|
3
|
10
|
|
Y
|
8
|
4
|
5
|
|
Z
|
2
|
4
|
1
|
1. Determine the decision variable (s) and the output variable?
2. Suppose the decision will be made under uncertainty and that the pessimistic approach will be used, which model would you choose? Justify your answer.
3. Suppose the decision will be made under risk and that the probability of providing the raw materials is 30% from X, 60% from Y and 10% from Z, which model would be the best. Justify your answer.