The Application of Decision Analysis to a New Product Planning Decision

Abstract

A description is provided of the way in which techniques of decision analysis were used to evaluate the profitability of acquiring resources to manufacture refrigerated container units on a regular basis. In particular, the study presented guidelines to management for planning production capacities, in terms of manpower and factory floor space, over an 11-year period, as well as indicating optimum price levels for the container units. The analysis relies heavily on the use of subjective probability assessments to forecast future values of world markets and company market share in an uncertain environment. Some general points are made on the problems and benefits of applying decision analysis to practical decision problems.