Page 420 - PM Integrated Workbook 2018-19

Chapter 15

According to the pay-off table from Illustration 5, the Expected Value of Profits
if 40 salads are supplied can be calculated as

(0.10 × $80) + (0.20 × $80) + (0.40 × $80) + (0.30 × $80) = $80.

Likewise:

Profits are therefore maximised at 50 salads and amount to $90.

EV ('50 salads daily supply') = ($0 × 10%) + ($100 × 20%) + ($100 × 40%) +
($100 × 30%) = $90

EV ('60 salads daily supply') = (– $80 × 10%) + ($20 × 20%) + ($120 × 40%) +
($120 × 30%) = $80

EV ('70 salads daily supply') = (– $160 × 10%) + (– $60 × 20%) + ($40 × 40%)
+ ($140 × 30%) = $30

Profits are therefore maximised at 50 salads and amount to $90.

Chapter 8

Example 1

Which of the following statements made about planning and control (as
described in the three tiers of Antony’s decision-making hierarchy) is/
are true?

(1) Operational control is about ensuring that specific tasks are carried out
efficiently and effectively.

(2) Strategic planning is concerned with making decisions about the efficient
and effective use of existing resources.

Only the first statement is true.

The second statement is not correct: it is management control, not strategic
planning, that is concerned with making decisions about the use of resources.
Strategic planning looks at the whole organisation and defines resource
requirements to achieve long-term strategic objectives.

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