战略商业领袖（ACCA）课件10-决策树27 World Engines 题目.docx

27 World Engines 15 marksWorld Engines (WE) is one of the largest producers of aircraft and ship engines in the world. It has assets in excess of $600bn. It is currently considering improvements to its marine engine production facilities. These improvements include the introduction of specialist hardware and software engine testing technology. Two companies have been shortlisted for supplying this technology.Amethyst is a well-established company whose product provides sophisticated testing facilities and costs $7m. The software that supports the product is written in a conventional programming language. The solution is widely used, but it is relatively inflexible and it has an out-of-date user interface. Amethyst has been trading profitably for 20 years and currently has an annual turnover of $960m.Topaz: is a relatively new company (formed three years ago) whose product is more expensive ($8m) but it offers significant advantages in high-volumeperformance and stress testing. It has a modular software design that allows it to be easily maintained and upgraded. It is written in a relatively new powerful programming language and it also has an attractive and contemporary user interface. Topaz currently has a turnover of $24m per year. Some WE executives are concerned about purchasing from such a young, relatively small company, although externally commissioned credit reports show that Topaz is a profitable, liquid and lightly geared company.Unfortunately, the financial specialist who had been leading the evaluation project has been taken ill, and will be off work for the foreseeable future. One of the divisional directors of WE has been asked to run the testing technology evaluation project in the specialists absence.The director has found the following table (Table 1) produced by the financial specialist. The divisional director recalls that these returns were based on 'tangible benefits resulting from the two options. The returnsreflect the characteristics of the two products. Topaz produces better returns if demand for testing is high, but is less effective in low demand circumstances. This is a reflection of the fact that the two solutions differ slightly in terms of their functional scope and power1.Table 1: Expected returns for three demand and supplier combinationsOption Supplier IF high demand IF low demandA Amethyst $3m per annum $0.5m per annumB Topaz $4m per annum $0. 1 m per annumThe divisional director also recalls a workshop convened to consider future market demand.'Demand in the marine industry is currently affected by global economic uncertainty and it is increasingly difficult to predict demand. I remember that we were also asked to estimate demand for our marine products for the next six years. We eventually came up with the following figures, although it was relatively hard to get everyone to agree and debate at the workshop became a little heated/High demand for six years: probability p = 0-4 Low demand for six years: probability p = 0-4 High demand for three years, followed by low demand for three years: probability p = 0.2These figures are confirmed by a document in the financial specialists files. !As I recall； said the divisional director, 'the financial specialist intended to develop a decision tree to help us evaluate the Amethyst and Topaz alternatives. However, there is no evidence that he ever constructed it, which is a shame because we could have taken the procurement decision on the basis of that decision tree/Required(a) Develop a decision tree from the information given in the scenario and discuss its implications and shortcomings. Ignore the time value of money in your analysis. (9 marks)(b) The divisional director suggests that the procurement decision could have been taken on theevidence of the decision tree. Discuss what other factors (not considered by the decision tree analysis) should also be taken into consideration when deciding which option to select. (6 marks)(Total =15 marks)