STATE OF NATURE |
||
ALTERNATIVE |
Best Payoff ($) |
Worst Payoff($) |
Small Facility |
350,000 |
20,000 |
Large Facility |
700,000 |
-320,000 |
Do nothing |
0 |
0 |
Probability |
0.6 |
0.4 |
Which alternative that maximizes the EMV?
For the problem above, At what probability of a “Best Payoff” will a manager be indifferent between Do Nothing, a Small Facility and a Large Facility? Assign variable values P = prob. of a favorable market (1 – P) = prob. of an unfavorable market
We need at least 10 more requests to produce the answer.
0 / 10 have requested this problem solution
The more requests, the faster the answer.
STATE OF NATURE ALTERNATIVE Best Payoff ($) Worst Payoff($) Small Facility 350,000 20,000 Large Facility 700,000...
Lecture Exercise #15 Consider the following payoff matrix: State of Nature Alternative High Demand (Prob. = 0.7) Low Demand (Prob. = 0.3) Build Large Plant $150,000 $70,000 Build Small Plant $110,000 $90,000 Do Nothing 0 0 . Without any additional information, what is the best decision? What is the EMV? If perfect information is available, what is the EVPI? .
State of Nature Alternative Favorable Market Unfavorable Market Large Plant 4 Small Plant 5 Do Nothing $150,000.00] -$180,000.00 $100,000.00 -$33,000.00 $0.00 $0.00 $100,000.00 $0.00 $33,000.00 5000 7 Marketing Research Survey Cost $10,000.00 Survey Results Unfavorable Conduct Market Survey Do Not Conduct Market Survey Calculate The EVPI Is the information worth the $10,000 it will cost to do the survey? Explain
1.Given is a decision payoff table. Future Demand Alternatives Low Moderate High Small Facility 53 31 22 Medium Facility 29 42 32 Large Facility -5 30 53 a) The best decision under uncertainty using MAXIMAX is to select facility b) The best decision under uncertainty using MAXIMIN is to select facility c) The best decision under uncertainty using LAPLACE/EQUALITY LIKELY is to select facility d) If the probabilities for Future Demand when it is Low = 0.35, Moderate = 0.30,...
A senator is selected at random, find the probability that the senator is democrat worst outcome for each row, or strategy,is Tu us, 2, and So for strategy 3. The maximum of these values is selected. Th -$4,000 for strategy Becky would select strategy 3, which reflects a pessimistic decision approach selects the alternative that maximizes the row averages. The row average for strategy 1 is approach e. If Cal and Becky are indifferent to risk, they could use the...
State of Nature Decision Alternative Strong Demand S1 Weak Demand S2 Small complex, d1 7 5 Medium complex, d2 14 6 Large complex, d3 20 -8 Suppose PDC is optimistic about the potential for the luxury high-rise condominium complex and that this optimism leads to an initial subjective probability assessment of 0.8 that demand will be strong (S1) and a corresponding probability of 0.2 that demand will be weak (S2). Assume the decision alternative to build the large condominium complex...
Three decision makers have assessed payoffs for the following decision problem (payoff in dollars). Decision Alternative State of Nature s1 s2 s3 d1 15 40 –20 d2 60 80 –80 The indifference probabilities are as follows: Indifference Probability (p) Payoff Decision Maker A Decision Maker B Decision Maker C 80 Does not apply Does not apply Does not apply 60 0.7 0.95 0.85 40 0.5 0.9 0.7 15 0.3 0.8 0.55 –20 0.15 0.6 0.35 –80...
strategy 3 is $0. Thus, using the eually cyp row average for strategy 2, which maximizes the row averages. -3 fonica Britt has enjoyed sailing small boats since she was 7 years old, when her mother started sail- er. Today, Monica is considering the possibility of starting a company to produce small sail- for the recreational market. Unlike other mass-produced sailboats, however, these boats will be boats made specifically for children between the ages of 10 and 15. The boats...
Quantitative Methods (STAT-201) Q3 . A manager is deciding whether or not to build a small facility. Demand is uncertain and can be either at a high or low level. If the manager chooses a small facility and demand is low, the payoff is $30. If the manager chooses a small facility and demand is high, the payoff is $10. On the other hand, if the manager chooses a large facility and demand is low, the payoff is -$20, but...
Show all calculations to support your answers (a) Describe the advantage in using a payoff matrix to analyse decisions. Explain the steps required in developing such a matrix (b) What advantage do decision trees provide and in what situations are they preferred to a payoff matrix? Goleb is considering the purchase of two types of industrial robots. The ROB1 is a large robot capable of performing a variety of tasks,including welding and painting. The ROB1 is a smaller and slower...
Lecture Exercise #12 Critical Path Method Determine the early start, early finish, late start, late finish times for each activity Identify the critical path . Activity А Time (days) 6 7 3 Predecessor(s) None None B с A 2 A E 4 B F 6 B 10 C. E D. F H 7 Lecture Exercise #13 Project Crashing Activity Predecessor(s) Time (weeks) Normal Crash 3 2 2 1 А B None None None с 1 1 Cost Normal Crash 1000...