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# ABSTRACT

This paper presents a study on the Problem Based Learning (PBL) implementation in the Faculty of Engineering and Built Environment. This PBL was implemented in the statistics engineering course for Semester four in order to solve the problem of Gorman Manufacturing Company on decision to manufacture a component part at its Milan, Michigan plant or to purchase the component part from a supplier as the profit is dependent upon the demand of the product. Thus, our purpose is to explore the use of decision analysis where decision is made by structuring and analyzing the managerial problems in the face of uncertainty, in a systematic and rational manner. Besides that, we also learn to appreciate the benefits of group work. In addition, there are steps in applying decision analysis which are (1) Definition of the problem; (2) Identify alternatives; (3) Construction of decision tree and the evaluation; and (4) Make a decision. Instead of solving the problem, there are several methodologies that being used such as decision tree, Bayes Theorem, Expected Value of Perfect Information (EVPI), Expected Value of Sample Information (EVSI) and Efficiency of information (E). From the given information (Given P(s1) 0.35, P(s2) 0.35, and P(s3) 0.30), by using all the methodologies and formulation, the value for EVPI is \$9000, EVSI is \$3648, and E is \$405.3. As the conclusion, we recommend Gorman Manufacturing Company to purchase the component part from a supplier if it is purely based on the expected value (EV) approach using probabilistic information regarding the states of nature. If a test market study on potential product demand is carried out, Gorman Manufacturing Company should manufacture the component part if the demand is favorable and manufacture the component part if the demand is unfavorable. The efficiency of the information is 40.53%.