Smart Steering Support

Final Report

Smart Steering Support

Prepared By:

Nipun Lavoie

February 24, 2011

Industrial Engineering 417: Operations Research II

TABLE OF CONTENTS

1. Problem Statement ……………………………………….3 - 7 2. Assumptions ……………………………………………...8

3. Definitions ………………………………………..............9

4. Decision Tree (Manual)…………………………………..10

5. Decision Tree (WinQSB) ………………………………...11

6. Decision Tree Analysis …………………………………..12

7. Explanation of Decision Tree…………………………….13

8. Sensitivity Analysis - Probability of Research Success …14

9. Sensitivity analysis - Selling price of DSS……………....15

10. Utility Decision Tree………………………………….....16

11. Decision Tree Analysis for Utility…………………….....17

12. Utility Graph ………………………………………….....18

13. EPVI……………………………………………………..19-20

14. Report to Manager ………………………………………21-23

15. APPENDICIES

i. First Report, Input/Output Screen shots

ii. Details and input/output for Sensitivity Analysis of Probability

iii. Details and input/output for Sensitivity Analysis of Selling Price

iv. Details and input/output for using utility function

v. Unexpected Problem

PROBLEM STATEMENT

On a sunny May morning, Marc Binton, CEO of Bay Area Automobile Gadgets (BAAG), enters the conference room on the 40th floor of the Gates building in San Francisco, where BAAG’s offices are located. The other executive officers of the company have already gathered. The meeting has only one item on its agenda: planning a research and development project to develop a new driver support system (DSS). Brian Huang, Manager of Research and Development, is walking around nervously. He has to inform the group about the R&D strategy he has developed for the DSS. Marc has identified DSS as the strategic new product for the company. Julie Aker, Vice President of Marketing, will speak after Brian. She