Suppose you plan to buy a new car and wish to pick a best one from a list of candidate models, shown in Table 1. To make this decision, you have designated a specialist to rate these models for you. In Table 2, each model has been given a score from 1 (the least desired) to 10 (the most desired) according to respective criteria. The weight of each criterion, representing its importance, is given in the bottom row of Table 1. Please calculate the overall score for each car model and find out the best alternative with the highest overall score. Table 1 Alternatives and Criteria of Selecting Car PriceFuel EfficiencyMaintenanceAccessInteriorAestheticsOverall Score1. Toyota Camry8879 2. Hyundai Elantra9858 3.Skoda Octavia7778 4.VW Passat7787 5.Citroen C47879 Weights0.30.40.20.1 China Eastern Airlines (MU) and Air China (CA) are two domestic carriers operating the route between Beijing and Shanghai. MU intends to initiate a discount on the ticket price from 1000 RMB to 800 RMB, in order to increase the sales in Spring Festival Holiday. Meanwhile, MU is informed that CA would do the same. Both MU and CA have two options, either reduce the price or keep the original price, resulting in four outcomes marked from 1. to 4. in Table 1. The payoffs at each outcome are also provided in Table 2 for MU and CA. Each player prefers the outcome with higher payoffs. Please find out which one of the four outcomes is most likely to happen by giving detailed steps for calculation. Table 2 Options and Payoffs for MU and CA CAOriginal PriceDiscountMUOriginal Price1. (30, 60)2. (-70, 80) Discount3. (60, 90)4. (-10, -10)

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Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.2: Elements Of Decision Analysis

Problem 2P

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Suppose you plan to buy a new car and wish to pick a best one from a list of candidate models, shown in Table 1. To make this decision, you have designated a specialist to rate these models for you. In Table 2, each model has been given a score from 1 (the least desired) to 10 (the most desired) according to respective criteria. The weight of each criterion, representing its importance, is given in the bottom row of Table 1.

Please calculate the overall score for each car model and find out the best alternative with the highest overall score.

Table 1 Alternatives and Criteria of Selecting Car

	Price	Fuel Efficiency	Maintenance Access	Interior Aesthetics	Overall Score
1. Toyota Camry	8	8	7	9
2. Hyundai Elantra	9	8	5	8
3.Skoda Octavia	7	7	7	8
4.VW Passat	7	7	8	7
5.Citroen C4	7	8	7	9
Weights	0.3	0.4	0.2	0.1

China Eastern Airlines (MU) and Air China (CA) are two domestic carriers operating the route between Beijing and Shanghai. MU intends to initiate a discount on the ticket price from 1000 RMB to 800 RMB, in order to increase the sales in Spring Festival Holiday. Meanwhile, MU is informed that CA would do the same. Both MU and CA have two options, either reduce the price or keep the original price, resulting in four outcomes marked from 1. to 4. in Table 1. The payoffs at each outcome are also provided in Table 2 for MU and CA. Each player prefers the outcome with higher payoffs. Please find out which one of the four outcomes is most likely to happen by giving detailed steps for calculation.

Table 2 Options and Payoffs for MU and CA

	CA
Original Price	Discount
MU	Original Price	1. (30, 60)	2. (-70, 80)
Discount	3. (60, 90)	4. (-10, -10)

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