Avalanche Corporation: Integrating Bayesian Analysis into the Production Decision-making Process

Description

The director of operations at Avalanche Corporation was faced with some major decisions. The firm was experiencing considerable difficulties in matching supply with demand. As a result, the company was overproducing and had to sell the excess at a loss. At a recent board meeting, the vice president of marketing reported on a new snowboard product, the Avalanche Racer. She presented her rationale for introducing a new ski product at this time by highlighting the growth of the ski equipment sales over the past five years. The board meeting concluded with the general manager tasking the director of operations with developing an analysis and reporting back his findings to the board the following week.

Learning Objective

·Appreciate the basic steps in short-term capacity planning. ·Understand the role of expected value in capacity planning. ·Use Bayesian analysis for updating prior probabilities.Grasp the basics of decision tree analysis.

Keywords

Break-even analysis Decision making Manufacturing Risk analysis Skiing