Airway (a Midwestern department store chain) andCorvett (an Eastern department store chain) are determiningwhether to expand their geographical bases. The only viablemanner by which expansion might be carried out is for achain to open stores in the other’s area. If neither chainexpands, then Airway’s profits will be $3 million andCorvett’s will be $2 million. If Airway expands and Corvettdoes not, then Airway’s profits will be $5 million, andCorvett will lose $2 million. If Airway does not expand andCorvett does, Airway will lose $1 million, and Corvett willearn $4 million. Finally, if both chains expand, Airway willearn $1 million and Corvett will earn $500,000 in profits.Determine the equilibrium points, if any, for this game.

Airway (a Midwestern department store chain) andCorvett (an Eastern department store chain) are determiningwhether to expand their geographical bases. The only viablemanner by which expansion might be carried out is for achain to open stores in the other’s area. If neither chainexpands, then Airway’s profits will be $3 million andCorvett’s will be $2 million. If Airway expands and Corvettdoes not, then Airway’s profits will be $5 million, andCorvett will lose $2 million. If Airway does not expand andCorvett does, Airway will lose $1 million, and Corvett willearn $4 million. Finally, if both chains expand, Airway willearn $1 million and Corvett will earn $500,000 in profits.Determine the equilibrium points, if any, for this game.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.4: The Precision Tree Add-in

Problem 9P

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