Assignment No. 11Answer 2 d, e ASSIGNMENT NO. 11 (Decision Analysis)2. A manager of a shopping mall is considering three alternativeexpansion projects for his mall: a small motel, a theater, or arestaurant. The construction costs are about the same, but themonthly profits can be affecte3d by future economieconditions in the area. The following table shows the monthlynet operating revenue that could result from each project.ECONOMYCONDITIONSProjectGoodPoorFairMotel$7,000SI8,000S15,000Restaurant5,00010,000Theater13,00020,00010,00011,000Determine the best investment using the following decisioncriteria:a) Maximaxb) Maximine) Minimax Regretd) Hurwicz (a- 0,4) Index of optimisme) Equal likelihood3. Microchip is planning a new facility and considering alocation in the following countries. Depending on theeconomic conditions for the next 3 years, the following costshave been estimnated (SUS million).ЕCONOMICCONDITIONSCountrySameDeclineImproveKorea21.719.315.2China19.018.517.6India19.217.114.9Philippines16,822.513.8Singapore21.225.012.5Which alternative would be selected if:a) The decision maker is an optimist (Minimin)?b) The decision maker is a pessimist (Minimaxy?e) The decision maker has an index of optimism of 0.4?d) The decision maker wants to use the Minimax regretcriterion?

d) Hurwicz index of optimism with α = 0.4 α is the coefficient of realism which hovers between 0…

Answered: Assignment No. 11 Answer 2 d, e

Business

Economics

Assignment No. 11 Answer 2 d, e

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 4MC

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