8. ABC Inc. must make a decision on its current capacity for next year. Estimated profits (in $000s) based on next year's demand are shown in the table below. Next Year's Demand High $200 $120 $50 Alternative Low Expand $100 Subcontract $50 Do Nothing $40 Refer to the information above. a. Which alternative should be chosen based on the maximax criterion? b. Which alternative should be chosen based on the maximin criterion? c. Which alternative should be chosen based on the Lapalce criterion? d. Which alternative should be chosen based on criterion of realism with alpha=0.7? e. Which alternative should be chosen based on the minimax regret criterion?

8. ABC Inc. must make a decision on its current capacity for next year. Estimated profits (in $000s) based on next year's demand are shown in the table below. Next Year's Demand High $200 $120 $50 Alternative Low Expand $100 Subcontract $50 Do Nothing $40 Refer to the information above. a. Which alternative should be chosen based on the maximax criterion? b. Which alternative should be chosen based on the maximin criterion? c. Which alternative should be chosen based on the Lapalce criterion? d. Which alternative should be chosen based on criterion of realism with alpha=0.7? e. Which alternative should be chosen based on the minimax regret criterion?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Similar questions

a) What is the optimal solution and what is the value of the objective function b) Which constraints are binding and which constraint show extra capacity?c) 100 hours of manufacturing time became available .Evaluate the effect? Explain
46. Ford is going to produce a new vehicle, the Pioneer,and wants to determine the amount of annual capacityit should build. Ford’s goal is to maximize the profitfrom this vehicle over the next five years. Each vehicle will sell for $19,000 and incur a variable production cost of $16,000. Building one unit of annual capacity will cost $2000. Each unit of capacity will alsocost $1000 per year to maintain, even if the capacityis unused. Demand for the Pioneer is unknown butmarketing estimates the distribution of annual demandto be as shown in the file P09_46.xlsx. Assume thatthe number of units sold during a year is the minimumof capacity and annual demand. Which capacity levelshould Ford choose? Do you think EMV is the appropriate criterion?
The problem in Example 12.8 assumes that the heaviest demand occurs in the second (post-April) phase ofselling. It also assumes that capacity is higher in thesecond production opportunity than in the first. Supposethe situation is reversed, so that the higher capacity andmost of the demand occur in the first phase. Make somereasonable assumptions for the resulting input parameters, and then solve for the optimal production plan. Doyou get qualitatively different results? Which situationwould you rather face if you were ShirtTails?
A publisher has a fixed cost of $250,000 associated with the production of a college mathematics book. The contribution to profit and fixed cost from the sale of each book is $6.25. (a) Determine the number of books which must be sold in order to break even. (b) What is the expected profit if 50,000 books are sold?
6. Laura is trying to decide whether to sell her knitted hats on Etsy, at a holiday bazaar, or in a local boutique. Demand could be 0 hats/month, 10 hats/month, or 20 hats/month. Given the payoff matrix below, what is her decision under equally likely? Demand = 0 Demand = 10 Demand = 20 Etsy -$70 $80 $230 Bazaar -$60 $90 $240 Boutique -$80 $70 $220 Select one: a. Etsy and boutique. b. Etsy only. c. Etsy and bazaar. d. Bazaar and boutique. e. All 3 are equally good. f. Bazaar only. g. None of them are good options. h. Boutique only.
Wormwood, Ltd., produces a variety of furniture products. The planning committee wants to prepare an aggregate plan for the next six months using the following information.Month1 2 3 4 5 6Demand 160 150 160 180 170 140CapacityRegular 150 150 150 150 160 160Overtime 10 10 0 10 10 10Cost Per UnitRegular time $50Overtime 75Subcontract 80Inventory holding, per month 4Subcontracting can handle a maximum of 10 units per month. Beginning inventory is zero.Develop a plan that minimizes total cost. No back orders are allowed. Regular capacity = Regularproduction.
A Manager has the problem of assigning four new machines to three production facilities.The respective profits derived are as shown. If only one machine is assigned to a productionfacility, determine the optimal assignment.Profits ($’000) production facilityMachine A B CA 10 10 14B 10 11 13C 12 10 10D 13 12 11(c) Use Simplex method toMaximize 1 2 Ζ = 4x +10xSubject to 1 2 2x + x ≤ 501 2 2x + 5x ≤1001 2 2x + 3x ≤ 901 2 x , x ≥ 0QUESTION TWO
Variable cells Cell Name Final Value Reduced Cost Objective Coefficient Allowable Increase Allowable Decrease $B$6 Activity 1 3 0 30 23 17 $C$6 Activity 2 6 0 40 50 10 $D$6 Activity 3 0 –7 20 7 1E+30 Constraints Cell Name Final Value Shadow Price Constraint R.H. Side Allowable Increase Allowable Decrease $E$2 Resource A 20 7.78 20 10 12.5 $E$3 Resource B 30 6 30 50 10 $E$4 Resource C 18 0 40 1E+30 22 Which parameter is most sensitive to an increase in its value?
ABC Inc. must make a decision on its current capacity for next year. Estimated profits (in $000s) based on next year's demand are shown in the table below. Next Year's DemandAlternative Low HighExpand $100 $200Subcontract $50 $120Do nothing $40 $50 Using the information above, which alternative should be chosen based on the maximin criterion?
19. What combination of x and y will yield the optimum for this problem? Maximize $3x + $15y, subject to (1) 2x + 3y ≤ 12 and (2) 5x + 2y ≤ 10 and (3) x, y ≥ 0. Part 2 A. x = 0, y = 3 B. x = 2, y = 0 C. x = 0, y = 0 D. x = 0, y = 4 E. x = 1, y = 5
Variable cells Cell Name Final Value Reduced Cost Objective Coefficient Allowable Increase Allowable Decrease $B$6 Activity 1 3 0 30 23 17 $C$6 Activity 2 6 0 40 50 10 $D$6 Activity 3 0 –7 20 7 1E+30 Constraints Cell Name Final Value Shadow Price Constraint R.H. Side Allowable Increase Allowable Decrease $E$2 Resource A 20 7.78 20 10 12.5 $E$3 Resource B 30 6 30 50 10 $E$4 Resource C 18 0 40 1E+30 22 What is the allowable range for the right-hand-side for Resource C?
Northwest Pipe (NP) makes water pipe. NP is planningproduction for the next seven months, March through September.Th e forecast demands (in thousands of feet) are, respectively, 40,60, 70, 80, 90, 100, and 80. NP can make 75,000 feet of pipe permonth using regular-time production, at a cost of $1.25 per foot.Th ey can make up to an additional 15,000 feet using overtimeproduction at a cost of $1.50 per foot. Any pipe made in onemonth and sold in a later month incurs an inventory holding costof $0.15 per foot, per month. NP expects to end February with5000 feet of pipe and would like to plan to end September with10,000 feet in inventory. NP would like to plan their productionschedule to minimize total cost during the next seven months. (a) Formulate an LP to minimize total costs.(b) Set up and solve the problem on a spreadsheet.(c) What is the optimal solution? Explain the rationale for thesolution