Business Finance Homework Help

Use the following information for the remainder of the questions.

Dan has finally decided to create his own product line of cat related items hosted at his new business the Cat Empurrium. Dan wants to produce his stellar, award winning products: cat ponchos, cat hammocks and cat backpacks. These three products each make a profit of $10, $15 and $25 per unit respectively.

Dan reached out to his business colleagues for help to plan for the future of his company. Overall consensus for this business plan was that Dan had to first choose which product he’d be producing at the beginning of 2021. Due to capacity constraints he would not be able to focus on more than one product line in the beginning. After demand for that first product during 2021 was realized, Dan would be faced with another key decision at the beginning of 2022: expand into another product line or focus solely on one product. If Dan chose to expand into another product he would need to decide if the business should expand into the final product or not at the beginning of 2023. However, if Dan stuck with 1 product his colleagues agreed that he should continue to do so.

Reaching out to his operations and marketing teams, Dan asked them to help predict the future demand for each of his products. Both teams gave him an optimistic forecasted demand series (shown below) and a pessimistic forecasted demand series (second table). Additionally, both teams concluded that either set of demands had an equal chance of occurring due to Dan not giving them any time to conduct additional market research.

Optimistic Demand Forecast

Year	2021	2021	2021	2021	2022	2022	2022	2022	2023	2023	2023	2023
Quarter	1	2	3	4	1	2	3	4	1	2	3	4
Demand for ponchos	400	500	535	560	600	550	700	750	635	700	800	850
Demand for hammocks	250	300	400	450	480	520	550	600	650	725	840	930
Demand for backpacks	100	150	200	205	310	410	400	390	450	500	525	540

Pessimistic Demand Forecast

Year	2021	2021	2021	2021	2022	2022	2022	2022	2023	2023	2023	2023
Quarter	1	2	3	4	1	2	3	4	1	2	3	4
Demand for ponchos	300	400	420	460	480	500	600	625	535	585	725	750
Demand for hammocks	200	220	300	350	380	420	450	500	550	625	740	830
Demand for backpacks	50	75	125	165	210	310	300	290	415	375	450	340

Dan hopes to make a name for himself and his Cat Empurrium in the pet industry. As such, Dan has insisted to his operations team that they must try to meet their customers’ expectations and try their best to never miss a customer.

Question1 :

From the information above, draw a decision tree for Dan’s Cat Empurrium. Make sure to use the correct shapes for each node, labeling each branch correctly and including a payoff at the end of each branch. Please upload the diagram to Canvas

10 pts for the diagram, 10 pts for the correct payoffs.

Question 2: Report both the decision with the highest expected payoff (4pts) , and the expected monetary payoff of that decision (2pts).

Question 3: Assuming the payoff structure doesn’t change, why might a manager under Dan’s employ choose a decision that is not the highest expected payoff? List at least 2 reasons. Justify those reasons.

Question 4: What particulars of Dan’s newfound business should he consider focusing on and making the core competencies of his operations? Justify your answers.

Question 5: Dan realizes he needs his operations team to create an aggregate plan. Pitch a particular strategy to Dan, highlighting the strengths of the plan. Your strategy should include more than the following: plan for workers, meeting demand, etc. Tie your plan back to the companies core competencies you discussed earlier.

Note: Do not create an excel file with an aggregate plan for this question.