FINAL EXAMINATION

FINAL EXAMINATION
Subject : Management Decision Making
Date of exam : On Sunday, July 27, 2014
Duration : 240 minutes
Class : IEMBA IEI01
Students !ame: !"#$%! &## '(!& (D: )!10014*2
Date of birt+: 01,01,1-74 Class: (%'./ (%(01 0otal number of 1a2es:33333333333333333333333333
Students Signature
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Eaminers Signature
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!a"er #ode
FINAL EXAMINATION
FINAL EXAMINATION
Subject: '/!/"%'%!0 D%C(S(O! '/5(!"
Date of exam: On Sunday, July 27, 2014
Class: (%'./ (%(01
0ime allo6ed: $%0 minutes
Mark
Question 1:.
Question 2:
Question 3:
Question 4:
Question 5:
Sum :..
Lecturers comment
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Lecturers Signature
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ANS&E' ALL ()ESTIONS*
1+ Eamine t,e case and e"-ain t,e .inancia- im"-ications o. se--ing rinse str/rene to a
0aste ec,ange+ &ou-d con1erting t,e rinse str/rene into concerte coating and se--ing
it as a 2/3"roduct 2e more .inancia--/ ad1antageous4 560 Marks7+
#se of rinse styrene in concrete coatin2 +ad a 7 0340 increase 1er 1ound of styrene3
On t+e ot+er +and, use of styrene resulted in 238 1ounds of CO2 emissions, durin2 t+e
1roduction of 2el coatin23 0+erefore, use of 900 1ounds of styrene amounts to 900 : 238 ;
1800 1ounds of CO2 emissions3 0+e styrene is a2ain used in t+e 1roduction of cement3 (t
use in t+is 1rocess results in t+e decrease of CO2 emissions by 0309 1er 1ound of styrene3
0+is is a 234< decrease =0309,238 : 100>3 (f rinse styrene is used in 1roduction of concrete
coatin2, t+ere is a reduction of t+e emissions by 73? 1ounds3 0+is means t+at t+e le@el of
emissions decreases to 1431 1ounds, =2134 A73? ; 1431>, 6+ic+ is ?4311<3 0+e by1roduct
syner2ies are im1ortant in t+at t+ey reduce t+e +aBardous 6aste bein2 released to t+e
en@ironment3 (t also reduces t+e CO2 emissions 2reatly3 0+ere is a ?4311< decrease in
emissions durin2 manufacture of concrete coatin2, and a 234< decrease in emissions durin2
cement manufacture3 #se of by1roduct syner2ies by CC4 +as a 1ositi@e im1act on t+e
en@ironment3
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FINAL EXAMINATION
$+ Ana-/se and consider t,e en1ironmenta- im"act o. im"-ementing B!S 52/3"roduct
s/nerg/7+ &,at do /ou e"ect to 2e t,e ke/ tradeo..s in t,is decision to im"-ement
B!S4 &,/ does ##! use tr/rene i. it is toic and e"ensi1e4 &,at 0ou-d 2e t,e
outcome i. t,e/ use -ess o. it4 560 Marks7+
a+ Ana-/se and consider t,e en1ironmenta- im"act o. im"-ementing B!S 52/3"roduct
s/nerg/7+
CC4 6ould reduce t+e cost of dis1osin2 rinse styrene3 Cinse styrene is a +aBardous
6aste material and t+e im1lementation of t+e byA1roduct syner2ies 6ould ensure t+at t+ere
is no 6aste matter to be dis1osed3 0+is is im1ortant in t+at t+e rinse styrene 6ill be used in
t+e 1roduction of concrete coatin2 and reduce t+e emissions t+at are as a result of
1roduction of t+e c+emicals used instead of styrene3
2+ &,at do /ou e"ect to 2e t,e ke/ tradeo..s in t,is decision to im"-ement B!S4 &,/
does ##! use tr/rene i. it is toic and e"ensi1e4
CC4 is also facin2 t+e balance amon2s t+ese factors 6+en maDin2 decisions about
t+e amount of styrene t+at com1anies use to rinse t+e s+aDer and mixer3 0+e more 6e use
styrene t+e cleaner eEui1ment isF t+is +el1s 1re@entin2 t+e next consi2nment from 1ollution
and meets t+e tec+nical 1arameters3 &o6e@er, des1ite additional styrene le@els reduces t+e
risD of 1ollution for t+e next consi2nment, t+e amount of styrene su11lements may reduce
1rofit =refer to /11endix 8 for t+e data analysis of t+e im1act of styrene to com1liance t+e
tec+nical 1arameters of t+e 1roduct>3 (n addition, styrene is an ex1ensi@e c+emical and once
it is used to rinse t+e s+aDer, it becomes toxic 6aste and t+e disc+ar2e is also costly3 CC4
1urc+ased styrene 6it+ t+e 1rice 70370,1ound and styrene disc+ar2e 6it+ an a@era2e cost of
7 0320,1ound3 Git+ t+e current use of 880 1ounds, 1roduction batc+, 1urc+asin2 costs and
styrene flus+in2 disc+ar2e accounts for a si2nificant 1ercenta2e of t+e total cost of 7 4920, a
batc+ of 10 co@erin2 2el barrels3 "romacDi ex1lained, HGe use styreneIdes1ite its costI
because t+e risD of usin2 somet+in2 else is so 2reat 6e donJt 6ant to taDe t+e c+ance on
Euality3H
/ccordin2 to a11endix 8 of t+e case study s+o6s t+at (f t+e @essels are rinsed usin2
800 1ounds of styrene, t+en t+ere 6ill be -8302< conformity to s1ec3 (f 100 batc+es are to
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FINAL EXAMINATION
be rinsed, t+enF -8302,100 ; 03-802 : 100 batc+es ; -8302 batc+es3
0+erefore, out of 100, =100 K -8302; 43-* batc+es> are lost due to contamination3
0+is number is decreased if t+e amount of styrene is increased3 Lor exam1le, if 900 1ounds
of styrene are used, t+ere is --3-9< conformity3 0+is means, if 100 batc+es are bein2
cleaned, t+enF --3-9,100 ; 03---9 : 100 ; --3-9 batc+es3 0+at means t+at --3-9 batc+es
conform to s1ec, 6+ile 0304 batc+es are lost3 G+en t+e rinse styrene is increased by 100
1ounds, =100,800 ; 032 : 100< ; 20<> 6+ic+ is a 20< increase of t+e styrene used, t+ere
is a decrease in t+e batc+es lost, =43-* K 0304 ; 43 -4>, 6+ic+ translates to a --32< decrease
in t+e batc+es lost =43-4,43-* :100< ; --32<>3 0+is s+o6s t+at t+ere is need to use to a
reasonable amount of styrene3
c+ &,at 0ou-d 2e t,e outcome i. t,e/ use -ess o. it4
0+e tec+nicians of t+e CC4 +as reduced t+e le@els of styrene in t+e 1ast years and
t+ey belie@e t+at t+ey can not reduce furt+er if t+ey do not a11ly risDs 6+ic+ are
unacce1table for 1roduct Euality3 /s "romacDi remembered, HGe 6ere in a JBero 1ro2ressJ
situation3 (f 6e used less styrene to rinse t+e @esselIt+e traditional 6aste minimiBation
a11roac+ t+rou2+ source reductionI 6e 6ould run t+e risD of contamination3 0+is meant
t+at all of t+e traditional 1ollution 6aste reduction met+ods 6ere off t+e table for us3H
6+ An in1estment o. 86M 0ou-d 2e re9uired .ro 'esearc, and De1e-o"ment: Marketing
and tec,nica- su""ort to 2ring t,e 2/3"roduct on-ine+ ;o0 0ou-d /ou .actor t,is into
/our .inancia- ana-/sis4 5$0 Marks7+
a+ Financia- Im"-ications
(n section 1 of =fi2ure A2> it +ad been s+o6n t+at 1rofit 6as +i2+ in 6aste exc+an2e
but it +ad ne2ati@e 1attern3 4rofit of ne6 business 6as not +i2+er as com1ared to 6aste
exc+an2e but it +ad u16ard trend3 (n section 2 of fi2ureA2, 1rofit from ne6 business 6as
+i2+er as com1ared to 6aste exc+an2e and it +ad u16ard trend3 On t+e ot+er side, 1rofit
form 6aste exc+an2e 6as lo6er as com1ared to ne6 concrete coatin2 business and it +ad
ne2ati@e trend3 (t 6as concluded t+at concrete coatin2 business 6as beneficial in lon2 term3
Cost of 6aste 6as increasin2 6+ic+ +ad ne2ati@e im1act on t+e 1rofitability of 6aste
exc+an2e3
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FINAL EXAMINATION
(n section ? of =fi2ure A?> it +ad been s+o6n t+at t+e 1rofit 6as +i2+ in business as
usual but it +ad ne2ati@e 1attern3 Cost of dis1osal 6as increasin2 so 1rofit 6as decreasin23
4rofit of ne6 business 6as not +i2+er as com1ared to business as usual but it +ad u16ard
trend because 1rofit 6as increasin23 (n section 4 of fi2ureA?, 1rofit from ne6 business 6as
+i2+er as com1are to business as usual and it +ad u16ard trend3 On t+e ot+er side, 1rofit
from business as usual 6as lo6er as com1are to ne6 concrete coatin2 business and it +ad
ne2ati@e trend3 (t 6as concluded t+at concrete coatin2 business 6as beneficial in lon2 term3
/ll t+ree alternati@es 6ere com1ared to eac+ =See fi2ureA4> ot+er and it 6as found
t+at exc+an2e 6aste 6as more 1rofitable as com1are to business as usual3 !e6 business
6as more 1rofitable t+an exc+an2e 6aste3 !e6 business of concrete coatin2 6ould be t+e
most 1rofitable business3
2+ En1ironmenta- Im"-ications
%mission of carbon dioxide 6as increasin2 6it+ t+e increase in styrene t+at +ad its
im1act on t+e cost3 (nitial in@estment for ne6 business 6ould be 7?,000,000 but t+ere 6as
no dis1osin2 cost for t+e ne6 business3
%mission of carbon dioxide 6as increasin2 6it+ t+e increase in styrene t+at +ad its im1act
on t+e cost3 (nitial in@estment for ne6 business 6ould be 7?,000,000 but t+ere 6as no
dis1osin2 cost for t+e ne6 business3
G+en cement industry continued to use styrene, carbon dioxide emission 6ould be
decreased3 (f CooD Com1osites and 4olymers Co decided to start ne6 business, it 6ould
decrease carbon dioxide3 .ot+ o1tions +el1ed to reduce carbon emission but ne6 business
reEuired in@estment3
Certified %missions Ceduction =C%C> can be used to find t+e o11ortunity cost of
eac+ business3
c+ #onc-usion
(t 6as found t+ou2+ Euantitati@e analysis t+at ne6 business 6as t+e best o1tion for (f
CooD Com1osites and 4olymers Co3
%+ #onsider t,e 9uantitati1e e-ements o. t,e case+ ;o0 do emissions c,ange at t,e
cement ki-n i. one "ound o. rinse st/rene is re"-aced 0it, t,e e9ui1a-ent amount o. t,e
.ossi- .ue-s4 510 Marks7+
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FINAL EXAMINATION
1 4ound rinse styrene, to 1roduce: 20 4ound cement
1 4ound Cement 1roduct, to release: 0,28 4ound CO2 =fossil usin2>
0,1- 4ound CO2 =rinse styrene usin2>
20 4ound Cement 1roduct, to release: 8 4ound CO2 =fossil usin2>
?,* 4ound CO2 =rinse styrene usin2>
/mount of CO2 emissions 6+en one 1ound of rinse styrene is re1laced 6it+
eEui@alent amount of fossil fuels: 1,2 4ound CO23
<+ ;o0 ma/ 0e ca-cu-ate t,e emissions c,ange associated 0it, "roducing concrete
coatings 2ased on rinse st/rene instead o. t,e con1entiona- met,ods4 510 Marks7+
'iDe "romacDi +as to decide t+e best alternati@es, to ensure t+at t+e emissions are
reduced3 0+e @ice 1resident s+ould o1t for t+e 1roduction of concrete coatin2 usin2 rinse
styrene3 1 1ound of rinse styrene results in a decline in t+e CO2 emissions by 132 1ounds,
t+an t+e use of con@entional concrete coatin23 0+is means t+at is rinse styrene is usedF 2134
1ounds K 132 1ounds ; 2032 1ounds of CO2 6ould be 1roduced3 On t+e ot+er +and, t+e cost
of 1roduction increases since more styrene is used3 0+is is because t+e concrete coatin2
1roduced contains 80< of styrene3 (f t+e mana2ement decides to reduce t+e amount of
styrene in t+e 1roduction of cement, and instead di@ert it to t+e 1roduction of concrete
coatin2, t+ey increase t+e emissions of cement Diln by 132 1ounds =Mee, 0offel and "ordon
1->3 0+is means t+at t+e o@erall emissions of t+e CO2 remain t+e same3 0+is is because an
increase in t+e amount of styrene in t+e 1roduction of concrete coatin2 reduces t+e CO2 by
132 1ounds3 0+ere is an eEui@alent increase in t+e CO2 emissions 6+en a 1ound of styrene
is di@erted from t+e combustion of Diln to 1roduce cement, to t+e 1roduction of concrete
coatin23
&o6e@er, t+e o@erall en@ironmental +aBard 6ill increase since t+e 1roduction of a sin2le
1ound of styrene results in t+e emission of 238 1ounds of CO23
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FINAL EXAMINATION
Appendix
Table 1
!roduction
4roduction
ca1acity =@essel
@olume>
880 2al : 18 ; *280 2al
Sales cost : 200? 7*28 =million>
2004 7-98 =million>
2008 71104 =million>
2009 711?* =million>
2007 71071 =million>
'inse st/rene
/mount of Cinse
styrene
8801ound 1er batc+
Cinse styrene
buyin2 cost
7037 1er 1ound
&aste
Gaste /mount N
Dis1osal cost of
6aste
7032 1er
1ound
(ncreasin2 8< 1er year
Ec,ange
/mount of
exc+an2e
N
%xc+an2e cost 7032 1er 1ound
#O
$
Carbon Dioide
emissions amount
4roduction O 0rans1ortation O dis1osal
Carbon Dioide
emission cost
7032 1er
1ound
$
0.20
Carbon Dioide
emission at "el
coat mf23
238 C!
2
,styrene
1ound 2.5

0.50

0.50
Gel
Coat
Carbon Dioide
emission
0328 C!
2
,cement
"ound 0.25

0.05
at cement mf23 031- C!
2
,cement
"ound 0.19

0.04

0.09
Cemen
t
Carbon Dioide
emission
2134 C!
2
,
cement "ound 21.4

4.28
at concrete
coatin2 mf23
1431 C!
2
,cement
"ound 14.1

2.82

7.10
Concre
te
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FINAL EXAMINATION
Figure 0-1
Figure 0-2
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FINAL EXAMINATION
Figure 0-3
Figure 0-4
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