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MGT253. Risk and Quality Management




Assignments MGT253. Risk and Quality Management;Mgt 253. Risk and Quality Management;Assignment 1;Telewonder in Slovobia;Slovobia is a former Soviet Republic. It has a population of 30 million people, 35% of whom are ethnic Russians and 65% of whom are Turkic Muslims.;Slovobia has identified the establishment of modern telecommunications capabilities as a high priority. Such capabilities are expected to cost 20 billion Slovars over a 5-year period. The official exchange rate is $1 = 10 Slovars. The black-market rate fluctuates wildly, but basically converges at $1 = 25 Slovars.;Slovobian authorities are hopeful that a low-interest International Development Association (IDA) loan can be obtained to cover a third of the anticipated project costs. They want the telecommunications contractor to supply credit for 10% of the project costs. The remaining funds will come from a variety of sources, including the Telecommunications Ministry and commercial banks.;Telewonder Telecommunications Corporation, an Australian provider of telecommunications services, has been approached by Muhammed Farsi -- the Minister of Telecommunications -- about its interest in bidding on the project. He informs Telewonder that an RFP (request for proposal) will be issued shortly after Slovobia holds its first democratic election in history. Unfortunately, elections recently had to be rescheduled owing to a fundamentalist Muslim insurgency in the southwest portion of the country.;1. Risk identification? What are the risks Telewonder faces if it obtains a contract todevelop telecommunications capabilities in Slovobia?;2. Risk impact analysis? What are the consequences to Telewonder if the anticipatedrisks become real?;3. Risk response planning? What can Telewonder do to handle risks?;?2013 University of Management and Technology 1;Assignments MGT253. Risk and Quality Management;Assignment 2;Events Plus Inc.;Events Plus Inc. is a company that organizes seminars. Each year, it holds some 120 seminars dealing with business management and public sector management themes.;In order to encourage early enrollments to its seminars, Events Plus offers 20 percent discounts to participants who register for a class up to six weeks in advance of the date of the seminar offering. Because this is an attractive discount, popular classes usually experience heavy levels of sign-ups before the six-week pre-seminar cut-off point. Less popular courses experience weaker levels of sign-ups.;Table 1 shows data collected on 110 seminar offerings that were tracked by Events Plus over the past year and a half. Looking at the data, Events Plus finds that in 22 cases, enrollments were so strong at the six-week marker that they covered all anticipated seminar costs. Typically, these classes resulted in decent profits, although in two cases the class had to be cancelled owing to instructor illness. In 33 cases, enrollments were reasonably good at the six-week marker and covered 70-95 percent of the seminar costs. The seminars usually experience some profit, although on ten occasions classes could not be held owing to insufficient enrollments. In 55 cases, enrollments were weak at the six-week marker, covering less than 70 percent of anticipated seminar costs. Often, these classes did not break even and in a number of cases resulted in substantial losses. On 22 instances, they were cancelled owing to poor enrollments.;Break even at six-week marker?;Hold seminar?;Overall;Probability;Yes, 22 times (20%);Yes, 20 times (91%);0.18;Yes, 22 times (20%);No, 2 times (9%);0.02;Almost, 33 times (30%);Yes, 23 times (70%);0.21;Almost, 33 times (30%);No, 10 times (30%);0.09;No, 55 times (50%);Yes, 33 times (60%);0.30;No, 55 times (50%);No, 22 times (40%);0.20;Table 1;Events Plus uses the information contained in this table to track enrollment strength course-by-course. That is, decision-makers use this historical data to determine the viability of current seminar offerings. At the six-week pre-course marker, managers review enrollments and classify a seminar according one of three categories: Break even as of today, almost break even as of today, and not-near-to-breaking-even as of today.;Assignment;1. Create a decision-tree that will help guide us in determining what action to take when we review student enrollments at the six-week, pre-course marker.;?2013 University of Management and Technology 2;Assignments MGT253. Risk and Quality Management;2. Senior management is reviewing past attendance at seminars. They want to have an overall understanding of how their seminar marketing efforts are doing. So they ask the following questions, which you should answer;a. What is the probability that Events Plus will reach the break even point at the six week marker and ultimately hold the seminar?;b. What is the probability that Events Plus will nearly reach the break even point at the six-week marker and ultimately hold the seminar?;c. What is the probability that Events Plus will not reach the break even point at the six-week marker, but winds up holding the seminar nonetheless?;3. Assume the cost of preparing for a typical seminar (including advertising cost) is $32,000 and revenue after preparation cost have been netted out is $20,000. When seminars are cancelled, the preparation costs are lost entirely.;a. If at the six-week marker we find that we have reached a break even point, what is the expected monetary value associated with deciding to hold the seminar? Does it make good business sense to go ahead and hold the seminar?;b. If at the six week marker we find that we are near to reaching a break even point, what is the expected monetary value associated with deciding to hold the seminar? Does it make good business sense to go ahead and hold the seminar?;c. If at the six week marker, we find that we clearly have not reached the break even point, what is the expected monetary value associated with deciding to hold the seminar? Does it make good business sense to go ahead and hold the seminar?;4. When Events Plus begins preparing to offer a seminar, what is the probability that the seminar will actually be held?;?2013 University of Management and Technology 3;Assignments MGT253. Risk and Quality Management;Assignment 3;George?s Thanksgiving Trip;George is invited by his sister, Dorothy, to attend a family reunion during the Thanksgiving weekend. Dorothy lives in Denver, NY, about 90 miles northeast of New York City. George lives in Washington, DC, about 215 miles south of New York City. George decides to visit Dorothy and to travel to her place by car.;The only problem is that road traffic during the Thanksgiving holidays is terrible along the East Coast of the United States. George would normally travel to Dorothy?s house by taking Interstate Highway 95. This is the major link connecting Washington and New York City. However, during Thanksgiving, the traffic on I-95 is usually bad, leading to major delays.;George decides to explore an alternate route to traveling to Dorothy?s. This route would be a few miles longer. Also, he would encounter a 60 mile segment of road in a rural area, and he would have to travel slowly on this segment. The good feature about the alternate route is that it is unlikely to suffer from Thanksgiving traffic.;A map showing the two routes to Dorothy?s house is offered in Figure 1.;Based on his experience in traveling along I-95 during Thanksgiving holidays, George has developed a good sense of the likelihood of delays that he can encounter on the journey. Table 1 shows the probability distributions he has created for all the segments of his trip to Dorothy for both the I-95 route and the alternate route.;Assignment;Using the information supplied in Figure 1 and Table 1, determine the expected amount of time it will take George to travel from Washington, DC to his sister?s house, employing both the I-95 and alternate route. SHOW YOUR WORK, DEMONSRATING HOW YOU ARRIVED AT THE ANSWERS YOU PROVIDE.;?2013 University of Management and Technology 4;Assignments MGT253. Risk and Quality Management;Figure 1. Two Routes to;George?s Sister?s House;Sister?s House;Upstate, New York;10 miles;East Branch;Kingston;60 miles;Binghamton;50 miles;80 miles;30 miles;New York City;Scranton;130 miles;175 miles;Legend;Highway, 70 miles per hour;Rural road, 40 miles per hour;Baltimore;40 miles;George?s house;Washington, DC;?2013 University of Management and Technology 5;Assignments MGT253. Risk and Quality Management;Probability Distributions for Travel Times on Journey;Probability;Probability;Probability;Probability;10%;20%;30%;40%;Probability;longer;longer;longer;longer;Regular Route;achieving;than;than;than;than;(East Route);schedule;schedule;schedule;schedule;schedule;Segment;Washington-;Baltimore;0.7;0.3;0.0;0.0;0.0;Baltimore-New York;City;0.0;0.1;0.2;0.5;0.2;New York City-;Kingston;0.1;0.2;0.3;0.3;0.1;Kingston-Sister's;Home;0.8;0.2;0.0;0.0;0.0;Probability;Probability;Probability;Probability;Probability;10%;20%;30%;40%;of;longer;longer;longer;longer;Alternate Route;achieving;than;than;than;than;(West Route);schedule;schedule;schedule;schedule;schedule;Segment;Washington-;Baltimore;0.7;0.3;0.0;0.0;0.0;Baltimore-;Binghamton;0.9;0.1;0.0;0.0;0.0;Binghamton-E;Branch;0.9;0.1;0.0;0.0;0.0;E Branch-Sister's;Home;0.8;0.2;0.0;0.0;0.0;?2013 University of Management and Technology 6;Assignments MGT253. Risk and Quality Management;Assignment 4;Monte Carlo Simulation Exercise;EQUIPMENT INSTALLATION AT GLOBUS ENTERPRISES;The equipment installation group at Globus Enterprises is about to make a cost estimate to determine how much it will cost to install a back-up generator at a government laboratory facility. Over the years, this group has carried out more than 100 such installations and has developed a database reflecting past experience. Data on the distribution of cost for design work, building effort, and testing effort is provided in Table 1.;Cheapest;Usual;Expensive;($/%);($/%);($/%);Design;9,000/30;10,000/40;12,000/30;Build;60,000/20;70,000/60;80,000/20;Test;18,000/20;20,000/50;24,000/30;Table 1. Historical Data on Cost Distributions;The data in the table picture the cost of an effort and the percentage of times this cost is achieved. For example, 30% of the time, ?Design? cost $9,000, 40% of the time it cost $10,000;30% of the time it cost $12,000.;00 16 45 84 18;83 28 82 36 91;95 14 80 68 34;54 55 13 20 70;57 68 61 37 30;09 81 24 55 21;Table 2. Two-digit Random Numbers;Assignment;1. Conduct a Monte Carlo simulation to create a distribution portraying total estimated project costs. Employ ten iterations in your computation. Display the distribution graphically.;2. On the average, how much does it cost to carry out this project?;3. What is the standard deviation of the distribution that you generated (use the formula;SD =??(Xi ? X-bar)2/N, where SD = standard deviation,? = square root symbol,? = the summation sign, Xi = the ith value of X, X-bar = the mean of the X values, and N = the number of values being considered)? What information does the standard deviation offer us that helps us develop a better understanding of risk in this case? (For more help on computing standard deviation, see below.);4. Roughly what is the probability that the project will cost more than $105,000?;?2013 University of Management and Technology 7;Assignments MGT253. Risk and Quality Management;Computing standard deviation for following numbers: 8, 4, 10, 7, 6;x - X-;X;X-bar;bar;Squared;8.00;7.00;1.00;1.00;4.00;7.00;-3.00;9.00;10.00;7.00;3.00;9.00;7.00;7.00;0.00;0.00;6.00;7.00;-1.00;1.00;Total =;35.00;20.00;Average = X-Bar =;7.00;4.00;(Sum Squared)/N = Variance;2.00;Sqrt(Variance) = Standard Deviation;Computing standard deviation for following numbers: 6, 7, 5.5, 8, 8.5;x - X-;X;X-bar;bar;Squared;6.00;7.00;-1.00;1.00;7.00;7.00;0.00;0.00;5.50;7.00;-1.50;2.25;8.00;7.00;1.00;1.00;8.50;7.00;1.50;2.25;Total =;35.00;6.50;Average = X-Bar =;7.00;1.30;(Sum Squared)/N = Variance;1.14;Sqrt(Variance) = Standard Deviation;Note that the spread of numbers in the first case above is greater than the second case, so that standard deviation in the first case (SD = 2.00) is greater than in the second (SD = 1.14);?2013 University of Management and Technology 8;Assignments MGT253. Risk and Quality Management;Assignment 5;Murphy?s Law at Travel-Rite;Mike Jones had worked at Travel-Rite as a bus driver for five years. He enjoyed the job. In turn, Travel-Rite was pleased with Mike, because he was courteous with clients and had a flawless safety record.;Mike was driving twenty-five tourists from Washington, DC to New York City on Interstate 95. He noticed that his fuel gauge showed that his twenty-nine passenger mini-bus was getting low on fuel, so he pulled into a gas station along the highway. At the fuel pump, he told the station attendant to fill up the fuel tank. Ten minutes later, the tank was filled and Mike pulled out of the gas station. The bus traveled about twenty-five meters, and then the engine died. Mike tried futilely to restart the engine.;It turned out that the gas station attendant had accidentally filled the fuel tank with gasoline instead of diesel fuel. The only way to deal with this would be to drain the gasoline out of the fuel tank and to remove all traces of gasoline in the engine. The gas station lacked this capability, so the gas station manager arranged to have the mini-bus towed to a nearby garage. Meanwhile, Mike telephoned Travel-Rite?s headquarters to tell them of his predicament. The headquarters staff arranged to have the tourists picked up by a bus service operating out of New York City. Two hours after the bus breakdown, the tourists resumed their journey.;The mini-bus was towed to the garage, where mechanics attempted to determine whether the engine had been damaged by the gasoline. The chief mechanic telephoned Travel-Rite headquarters to deliver his report and was put in touch with Jennifer Chen, Travel-Rite?s president.;?There?s no problem cleaning up the engine,? he reported. ?In fact, we?ve already got it working. However, you appear to have a problem with your transmission, because the bus won?t go into second gear. We looked at the transmission and saw that it?s damaged.?;Jennifer was shocked to hear this and immediately telephoned the automobile dealer from whom she bought her buses. When he heard the story, he understood the nature of the problem.;?The transmission was damaged when the bus was being towed,? he said. ?The drive trains of buses are a bit complicated. You can?t just hook them up to a tow truck and start towing them. Several steps have to be taken to prepare them for towing, and obviously the tow truck driver didn?t do this.?;Jennifer felt sick. What began as an innocent refueling had turned into a disaster. Clients had been inconvenienced. Her new bus had been damaged. All this was happening far from headquarters, so resolution of the dispute with the gas station, tow truck company, and garage would have to be carried out remotely.;Questions;1. From Travel-Rite?s perspective, to what extent is the incident described in this case an ?act of God? as opposed to a controllable event?;?2013 University of Management and Technology 9;Assignments MGT253. Risk and Quality Management;2. What general categories of risk are being encountered here (e.g., business risk)? Explain your answer.;3. How would you go about conducting an ex post facto risk assessment of this incident? What conclusions might result from this assessment? What risk mitigation steps should be taken to avoid a repetition of this kind of event in the future?;?2013 University of Management and Technology 10;Assignments MGT253. Risk and Quality Management;Assignment 6;Part A. Scattergram Exercise;The table on the right examines the number defects associated with different levels for processing widgets. For example, when the processing speed reaches 60 widgets per hour, an average of 65 defects are encountered.;Draw a scatter diagram showing the relationship between processing speed and defects. What conclusions can you derive from the diagram?;Units Processed;Average Number;per Hour;of Defects;300;50;400;42;500;40;600;55;700;80;800;95;?2013 University of Management and Technology 11;Assignments MGT253. Risk and Quality Management;Part B. Office Move: Cause and Effect (Fishbone) Diagram Exercise;You are in charge of managing a project to relocate an office from one building to another. The new building is located three kilometers from the old one. Your job is;? to schedule the move;? to make sure the old building is prepared for the move (e.g., to reserve use of elevators);? to make sure the new building is prepared for the move (e.g., to reserve use of elevators);? to make sure all employees are aware of their responsibilities to help the move to go well;? to handle all the financial arrangements associated with the move;? to handle all contractual arrangements associated with the move;? to arrange for the moving company to pack, transport, and unpack the furnishings being moved.;Using the information supplied here, create a cause-and-effect diagram that describes the move effort.;?2013 University of Management and Technology 12


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