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Here are the changes to the original problem and the revised conditions for this decision-making problem: With a favorable market, John Thompson thinks a large facility would result in a net profit of $190,000 to his firm.

Here are the changes to the original problem and the revised conditions for this decision-making problem: With a favorable market, John Thompson thinks a large facility would result in a net profit of $190,000 to his firm.

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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The last two steps are to select and apply the decision theory model. Table 3.1 Decision Table with Conditional Values for Thompson Lumber STATE OF NATURE ALTERNATIVE FAVORABLE MARKET ($) UNFAVORABLE MARKET ($) Construct a large plant 200,000 -180,000 Construct a small plant 100,000 -20,000 Do nothing 35 Note: It is important to include all alternatives, including "do nothing." 64
Transcribed Image Text:The last two steps are to select and apply the decision theory model. Table 3.1 Decision Table with Conditional Values for Thompson Lumber STATE OF NATURE ALTERNATIVE FAVORABLE MARKET ($) UNFAVORABLE MARKET ($) Construct a large plant 200,000 -180,000 Construct a small plant 100,000 -20,000 Do nothing 35 Note: It is important to include all alternatives, including "do nothing." 64
Here are the changes to the original problem and the revised conditions for this decision-making problem: With a favorable market, John Thompson thinks a large facility would result in a net profit of $190,000 to his firm. If the market is unfavorable, the construction of a large facility would result in $190,000 net loss. A small plant would result in a net profit of $120,000 in a favorable market, but a net loss of $30,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. a) Create a decision table, like the one presented on Table 3.1 (page #65). b) What is your recommendation if you would apply the Maximax criterion (Optimistic)? Follow the guidance from your textbook and create a table similar to Table 3.2 (page #66). c) What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? Follow the guidance from your textbook and create a table similar to Table 3.3 (page #66). d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.7. Follow the guidance from your textbook and create a table similar to Table 3.4 (page #67). e) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? Follow the steps from your textbook and create a table similar to Table 3.5. f) What is your recommendation if would apply the Minimax Regret criterion. Follow the guidance from your textbook and create 3 tables similar to Tables 3.6, 3.7 and 3.8 (pages 68-69). g) What is your recommendation if you would apply the Expected Monetary Value, assuming that the probability of a favorable market is 60% and the probability of an unfavorable market is 40%. Follow the guidance from your textbook and create a table similar to Table 3.9 (page 70).
Transcribed Image Text:Here are the changes to the original problem and the revised conditions for this decision-making problem: With a favorable market, John Thompson thinks a large facility would result in a net profit of $190,000 to his firm. If the market is unfavorable, the construction of a large facility would result in $190,000 net loss. A small plant would result in a net profit of $120,000 in a favorable market, but a net loss of $30,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. a) Create a decision table, like the one presented on Table 3.1 (page #65). b) What is your recommendation if you would apply the Maximax criterion (Optimistic)? Follow the guidance from your textbook and create a table similar to Table 3.2 (page #66). c) What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? Follow the guidance from your textbook and create a table similar to Table 3.3 (page #66). d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.7. Follow the guidance from your textbook and create a table similar to Table 3.4 (page #67). e) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? Follow the steps from your textbook and create a table similar to Table 3.5. f) What is your recommendation if would apply the Minimax Regret criterion. Follow the guidance from your textbook and create 3 tables similar to Tables 3.6, 3.7 and 3.8 (pages 68-69). g) What is your recommendation if you would apply the Expected Monetary Value, assuming that the probability of a favorable market is 60% and the probability of an unfavorable market is 40%. Follow the guidance from your textbook and create a table similar to Table 3.9 (page 70).
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