Question
Decision Making
Homework Assignment 1
Instructions
Please submit your work, and all supporting
documents on Canvas.
You might want to build simple Excel models to
answer the questions below. However the main goal
of the assignment is to make you think about
the trade-offs involved in these decisions. We will build
detailed models in class.
Questions
1. Please read the “Eagle Airlines Case”
posted under Session 1 on Canvas.
a) Do you think Keith Russell should buy the
Piper Chieftain? Why?
b) Think
about the uncertainties
involved when buying
the aeroplane, what
the major factors
are that may have a severe impact on
profitability, and how these factor influence
profitability and the decision whether or not
to buy the aeroplane.
2. Please read the “Dynatron Case” posted
under Session 2 on Canvas. Among the three production
alternatives
which suggestion would
you recommend? What
are the pros
and cons of
each
suggestion?
Expert Solution
Questions
1. Please read the
“Eagle Airlines Case” posted under Session 1 on Canvas.
a) Do you think Keith
Russell should buy the Piper Chieftain? Why?
Yes, Keith should buy the
aircraft because of several reasons. First it comes equipped with necessary
equipment required to operate a chartered plane thus he does not need to invest
in installing the equipment needed after purchase. Secondly, the chartered
plane will bring him more money in comparison to the other planes that operate
a scheduled flight. The difference in income between both is $145,416,000 with
the chartered plane bringing a revenue of $166,440,000 and the scheduled
flights bringing $21,024,000 annually with an approximate seating of 10 people.
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