Harimann International

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3/ Prepare a decision tree to include the different possible delivery dates of the embroider. Interpret the results.

We begin the tree plan with 2 scenarios: accept and decline. If Dhawan declines the order, he will lose 10% for investing materials (188,400 INR x 10% = 18,840 INR) . “ He reasoned that the investment of 188,400 INR was not really significant because, even though embroidered cloth could only be sold for about 65 % of cost, unembroidered cloth and the other materials could always be resold for 90% of their respective costs.”

With the scenario “ Accept”, we have 3 different delivery dates such as : 10-Mar, 20-Mar and 27-Mar.Based on some information provided “ Dhawan believed there was about a one in eight chance that the embroiderer would adjust his schedule and complete the Harimann order by the original date of March 10. Based on this part of the conversation, Dhawan believed that he was four times as likely to receive the goods on March 20 as on March 10.”So, we know the probability of every event note as below: * March 10: 1/8= 0,125

* March 20: 4 x 0,125=0.5

* And March 27: 1-0,125-0.5 =0,375

* With the event “March 10” – according to the schedule Dhawan expects, we face situation like question 1, no delay or delay. To avoid repeating, we use the result of question 1, Dhawan will receive profit 207,084 INR if it is delivered on March 10.

* With the event “March 20” – Dhawan will miss the original schedule. However, he still receive profit with 3 events analysed in Question 1: pay 50%, pay 30% and pay 20%. We will use the result of question 1 in the event “delay” – He will lose 225,528 INR .

* With the event “March 27” – it is the same with the event “March 20”. He will also lose 225,528 INR because of the late delivery.

If Dhawan accepts the order, he will lose 171,451 INR whereas he just loses 18,840 INR for investing materials if he declines the order.

4/ Prepare a decision tree to describe the situation with parallel production process.

Based on what we have analyzed in question 3, we should approach this question simply. The main point here is to decide which production scheme we should choose: sequential or parallel. To answer that concern, we assume that a new decision tree will be employed.

Firstly, we will have two initial decision ‘accept’ or ‘decline’. While ‘decline’ is the same as the previous trees, ‘accept’ branch is different. It will include even two new decision ‘Sequential’ or ‘Parallel’. The number 171,451 INR is derived from the question 3 then.

Secondly, in ‘Parallel’ brach, we still hold three possible delivery dates of embroidery with different meaning. When embroider finished their work on March 10, the in-house activities was being processed after that date and it will end before the deadline. Therefore, we still got 315,238 INR. With the date March 20, we have two possibilities: no problems arising (parallel activities lasting in 13-15 days) and problems occurring (parallel activities lasting in 20-22 days) with their probabilities 0.6 and 0.4 respectively. The rest one is March 27. On this really late completion date of embroidery, Dhawan only could start his parallel production so late although the parallel scheme could help him reduce the production time to even 13 days. So 100% he could not meet Pioneer’s deadline on April 6.

After very first analysis, we can substitute necessary data and then we arrive at the final decision. It’s better for Dhawan to accept the order with parallel production, which gain approximately 4300 INR.

5/ Assuming that Mr. Dhawan can hire an assistant who would make sure that there will be no internal production problem. How much he would pay for this assistant at most?

Mr. Dhawan considers how much he would pay for hiring an assistant if that one can make sure that there will be no internal problem in production process. There are two scenarios: hire or do not hire. According to the question 4 result, Mr. Dhawan still has a chance to get 4297.55 INR if he accepts the order then applies parallel production process without hiring assistant.

In case of Mr Dhawan decides to accept the order and hire an assistant, he also has 2 options: using sequential or parallel process. For “sequential”, the assistant will make sure that there will have no unexpected problems that be estimated 20% arise in the process by Mr, Dhawan so 100% he will ship the order before April 6 deadline.

Then we just consider 3 events may happen that embroiderer will complete embroidery on March 10 (0.125), March 20 (0.5) or March 27(0.375). If the embroiderer delivers the goods on March 10. Mr Dhawan surely can ship the order before deadline and receive profit 315238 INR. But if embroiderer completes the order on 20 March or March 27, there is no way for Mr Dhawan to ship goods on time and that leads to a loss is about 225528 INR for each scenario.

In case of using parallel production process, there are also 3 scenarios like “sequential process” as we mention above. If the embroidery delivers on March 10. Mr Dhawan can get 315238 INR and he will lose 225528 INR if embroiderer completes it on March 27.

In the other case, if embroiderer completes the order on March 20, Mr Dhawan scares that 40% the problem could arise because he had no experience with such a complicated operating process and his in-house production will many take time. However, the assistant hired will make sure that there will be no problem so that 100% Mr Dhawan will ship the order on time and receive the profit 315238 INR.

In short, if Mr Dhawan hire an assistant, he could have chance to get 112451 INR. On the contrary, he just could receive 4297.55 INR. So that, the maximum amount of money Mr Dhawan can pay for the assistant is about 108153 INR. However, to be more realistic, Dhawan just pay some percent of that amount based on the capability of assistant.

6/ Do you have any other suggestion to help Dhawan to improve further his situation with the order?

When we look at closely at Exhibit 1 ‘Pioneer Profit Analysis’, we can see the order included six styles, three of them embroidered and the rest not. The table below will illustrate how we split the original order into new smaller orders: | Quantity| Revenue| | Cost| Incentives| Final receipt| SPLIT 1

Style 1757