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MBA9 Operations and Supply Chain Management - Regenesys Business School

Question: Generate options, for each supply chain performance driver, to improve the strategic fit between the organisation's competitive strategy and its supply chain strategy, including strategies to overcome constraints.

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Solution:

Operation Supply Chains for Samsung South Africa Supply Chains

 

Decision Tree.jpg

In the Advertising Campaign example, there's a 50% chance of success or failure for both Facebook and Instagram. If you succeed with Facebook, your ROI is around $1,000. If you fail, you risk losing $200.

Instagram, on the other hand, has an ROI of $900. If you fail, you risk losing $50.

To evaluate risk versus reward, you need to find out Expected Value for both avenues. Here's how you'd figure out your Expected Value: take your predicted success (50%) and multiply it by the potential amount of money earned ($1000 for Facebook). That's 500.

Then, take your predicted chance of failure (50%) and multiply it by the amount of money lost (-$200 for Facebook). That's -100.

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