Qnt 561 Wk 3 Assignment Case 1: Bell Computer Company Expansion Strategy

Expansion Strategy and Establishing a Re-Order Point Name Course Tutors Name Date Case 1 Bell Computer Company The Bell Computer Company has the intention of expanding its plant to enable the company begin production of a new computer. The proposed expansion can either take the form of a medium scale or a large-scale project. With both alternatives the company faces uncertainty because this is a new product. For both alternatives, demand could be high, medium or low, the probability of these market conditions is 30, 50 and 20 respectively.In this analysis we will use statistical analysis to establish the profit that The Bell Computer Company can expect from each of the two alternatives given the market conditions. The findings of this analysis will inform on the decision on which of the two alternatives is consistent with the companys profit maximising objectives. The statistical analysis for the expected profit is below Medium-Scale Large-ScaleExpansion ProfitsExpansion ProfitsAnnual Profit (1000s)P(x)Annual Profit (1000s)P(x)DemandLow5020020Medium1505010050High2003030030Expected Profit (1000s)145140 The expected profit from Medium-scale expansion is 145,000 and the expected profit from Large-scale expansion is 140,000. The expected profit from the two alternatives is close, but the Medium-Scale Expansion has a higher profit and therefore should be chosen because