PT. Corona is currently trying to determine the size of the computer system which will provideoptimal cost consequences when using the leasing method. The results of each decision choiceand acceptance of the business situation (high and low) are summarized in the following table.Situation: ReceptionHigh$ 300,000$ 200,000$ 100,000Alternative decisionsLowGreat leasing systemMedium system leasingSmall leasing system-$ 15,000$ 20,000$ 60,000The director of this company wants to know which decision is best basedon several approaches, namely a) approach optimistic, b) approach conservative,c) approach minimax-regret. Help the Director find the answer.

PT. Corona is currently trying to determine the size of the computer system which will provide optimal cost consequences when using the leasing method. The results of each decision choice and acceptance of the business situation (high and low) are summarized in the following table. Situation: Reception High $ 300,000 $ 200,000 $ 100,000 Low -$ 15,000 $ 20,000 $ 60,000 Alternative decisions Great leasing system Medium system leasing Small leasing system The director of this company wants to know which decision is best based on several approaches, namely a) approach optimistic, b) approach conservative, c) approach minimax-regret. Help the Director find the answer.

PT. Corona is currently trying to determine the size of the computer system which will provide optimal cost consequences when using the leasing method. The results of each decision choice and acceptance of the business situation (high and low) are summarized in the following table. Situation: Reception High $ 300,000 $ 200,000 $ 100,000 Low -$ 15,000 $ 20,000 $ 60,000 Alternative decisions Great leasing system Medium system leasing Small leasing system The director of this company wants to know which decision is best based on several approaches, namely a) approach optimistic, b) approach conservative, c) approach minimax-regret. Help the Director find the answer.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 21P

See similar textbooks

Similar questions

The Tinkan Company produces one-pound cans for the Canadian salmon industry. Each year the salmon spawn during a 24-hour period and must be canned immediately. Tinkan has the following agreement with the salmon industry. The company can deliver as many cans as it chooses. Then the salmon are caught. For each can by which Tinkan falls short of the salmon industrys needs, the company pays the industry a 2 penalty. Cans cost Tinkan 1 to produce and are sold by Tinkan for 2 per can. If any cans are left over, they are returned to Tinkan and the company reimburses the industry 2 for each extra can. These extra cans are put in storage for next year. Each year a can is held in storage, a carrying cost equal to 20% of the cans production cost is incurred. It is well known that the number of salmon harvested during a year is strongly related to the number of salmon harvested the previous year. In fact, using past data, Tinkan estimates that the harvest size in year t, Ht (measured in the number of cans required), is related to the harvest size in the previous year, Ht1, by the equation Ht = Ht1et where et is normally distributed with mean 1.02 and standard deviation 0.10. Tinkan plans to use the following production strategy. For some value of x, it produces enough cans at the beginning of year t to bring its inventory up to x+Ht, where Ht is the predicted harvest size in year t. Then it delivers these cans to the salmon industry. For example, if it uses x = 100,000, the predicted harvest size is 500,000 cans, and 80,000 cans are already in inventory, then Tinkan produces and delivers 520,000 cans. Given that the harvest size for the previous year was 550,000 cans, use simulation to help Tinkan develop a production strategy that maximizes its expected profit over the next 20 years. Assume that the company begins year 1 with an initial inventory of 300,000 cans.
Server Farm Inc. (SFI) needs to upgrade its servercomputers. Company management has identified thefollowing two options: (1) shift to a Windows‐basedplatform from its current Unix‐based platform, or(2) stick with a Unix‐based platform. It is standardpractice at SFI to use a triangular distribution to modeluncertain costs.Along these lines, the company estimates that if itmigrates to Windows, the new server hardware couldcost as little as $100,000 or as much as $200,000. Thetechnical group’s best estimate is that the hardwareMantel_c04.indd 138 9/6/2016 4:52:35 PMcosts will be $125,000 if the Window’s option is pursued. Likewise, the company’s best guess regarding thecost to upgrade and convert its software to Windows is$300,000 with a range of $275,000 to $500,000.Finally, if the company converts to Windows, employeetraining costs are estimated to range between $9,000and $15,000, with the best guess being $10,000. If thecompany sticks with Unix, the new server hardwarewill most likely…
A firm must decide whether to construct a small, medium, or large stamping plant. A consultant’sreport indicates a .20 probability that demand will be low and an .80 probability that demand willbe high.If the firm builds a small facility and demand turns out to be low, the net present value will be$42 million. If demand turns out to be high, the firm can either subcontract and realize the net present value of $42 million or expand greatly for a net present value of $48 million.The firm could build a medium-size facility as a hedge: If demand turns out to be low, its netpresent value is estimated at $22 million; if demand turns out to be high, the firm could do nothingand realize a net present value of $46 million, or it could expand and realize a net present value of$50 million.If the firm builds a large facility and demand is low, the net present value will be – $20 million,whereas high demand will result in a net present value of $72 million.a. Analyze this problem using a decision…
See the answer A local movie studio wants to determine which of two new scripts they should select for their next major production. The manager feels that script #1 has a 70% chance of earning Php100 million over the long run, but a 30% chance of losing Php20 million. If this movie is successful, then a sequel could also be produced, with an 80% chance of earning Php50 million, but a 20% chance of losing Php10 million. On the other hand, she feels that script #2 has a 60 % chance of earning Php120 million, but a 40% chance of losing Php30 million. If successful, its sequel would have a 50% chance of earning $80 million and a 50% chance of losing Php40 million. As with the first script, if the original movie is a "flop," then no sequel would be produced. What is the expected payoff from selecting script #2?