Page 20 - CIMA MCS Workbook August 2018 - Day 1 Tasks
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CIMA NOVEMBER 2018 – OPERATIONAL CASE STUDY
4 RISK AND UNCERTAINTY
EXERCISE 4(A) – KEY RISKS
Question Your response
Identify four significant areas
of risk for GymFiT.
EXERCISE 4(B) – USING EXPECTED VALUES
Jessica Treewood (Marketing Director) is considering the possibility of producing a range of
sweatshirts with the GymFiT logo to reinforce the GymFiT brand. The plan would be to run the
idea as a pilot study, use an external supplier and get fitness trainers to sell the jumpers, splitting
profits. This is a new venture for GymFiT so the Board are concerned about the risks. A range of
scenarios have been discussed and outcomes have been estimated as follows:
Scenario I probability = 0.6 profit of C$50,000
Scenario II probability = 0.3 profit of C$12,000
Scenario III probability = 0.1 loss of C$25,000
Calculate the expected value of the profit and comment on the acceptability of the project.
16 KAPLAN PUBLISHING
