MacDonald Products, Inc.

, of Clarkson, New York, has the option of

(a) proceeding immediately with production of a new top-of-the-line stereo TV that has
just completed prototype testing or
(b) having the value analysis team complete a study.
If Ed Lusk, VP for operations, proceeds with the existing prototype (option a), at a price
of $560 each, the firm can expect sales to be  90,000 units with a probability of 0.55.
and 75,000 with probability of  0.45 
If, however, he uses the value analysis team (option b), at a price of $710, the firm
expects sales of  75,000 units with a probability of  0.61 and 70,000 units with a
probability of 0.39 .Value engineering, at a cost of $120,000, is only used in option b.
Which option has the highest expected monetary value (EMV)? Show the decision tree
and your computations
Computation
Option A
Sales x Price X Probability1 + Sales X Price X Probability2
= 90,000 X 560 X 0.55 + 75,000 X 560 x 0.45
= 27,720,000 + 18,900,000
= 46,620,000

Option B
Sales x Price X Probability1 + Sales X Price X Probability2
= 75,000 X 710 X 0.61 + 70,000 X 710 X 0.39
= 32,482,500 + 19,383,000
= 51,865,500 – Value Engineering Cost
= 51,865,500 – 120,000
= 51,745,500

ANSWER: Highest EMV is Option B

Decision Tree
PART 2B – (20Points) DRAW THE SERVICE BLUEPRINT, IDENTIFY FAILURE
POINTS AND SUGGEST POKA YOKES FOR A HOSPITAL’s Emergency Room
Process  (from the arrival of the patient to discharge)
 

Failure Points: Hospital parking- Limited due to the congestion of both hospital
ambulances and regular cars, The number of ambulances is limited as well as the
number of stretchers and wheel chairs, There may also be a problem in hospital
infrastructure as most of the time, nurses are the ones doing the initial visible work.
There may be a need for more nurse or volunteer staff for the initial greeting and
registration

Poke Yokes: Use of the overhead system so as to inform patients when they are called
in, this lessens the burdens on nurses to look for the patient. The overhead system can
also be used to call in nurses or inform them of any needs in the department. The
updated computer systems would make sure that the access to and admission of
information is seamless and without problems. The system should be user friendly as
well as always updated. There is also an automatic feature in the system for updating
the patient’s files. This ensures that the information given to the doctor in charge is
always up to date and reliable.
PART 3C – (20Points) DO A HOUSE OF QUALITY MATRIX FOR THE PROJECT –
BUILD A CAFETERIA FOR Medical City Staff and guests