The city of Segovia is analyzing the possibility of building a second airport to alleviat analyzing two potential locations, X and Y. Hard Rock Hotels would like to buy land to bu land has been rising in anticipation of the decision and is expected to skyrocket when th For this reason, Hard Rock would like to buy the land now. Hard Rock will sell the land there. Hard Rock has four options: (1) buy land in X, (2) buy land in Y, (3) buy land in compiled the following data (in millions of euros): Hard Rock estimates that there a 45 percent chance that the airnort wi11 be huilt
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- 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.Carlisle Tire and Rubber, Inc., is considering expanding production to meet potential increases in the demand for one of its tire products. Carlisle’s alternatives are to construct a new plant, expand the existing plant, or do nothing in the short run. The market for this particular tire product may expand, remain stable, or contract. Carlisle’s marketing department estimates the probabilities of these market outcomes to be 0.25, 0.35, and 0.40, respectively. The file P06_31.xlsx (picture of given excel file is attached) contains Carlisle’s payoffs and costs for the various combinations of decisions and outcomes. Identify the strategy that maximizes this tire manufacturer’s expected profit. Perform a sensitivity analysis on the optimal decision, letting each of the monetary inputs vary one at a time plus or minus 10% from its base value, and summarize your findings. Which of the inputs appears to have the largest effect on the best solution?A firm that plans to expand its product line must decide whether to build a small or a large facilityto produce the new products. If it builds a small facility and demand is low, the net present valueafter deducting for building costs will be $400,000. If demand is high, the firm can either maintainthe small facility or expand it. Expansion would have a net present value of $450,000, and maintaining the small facility would have a net present value of $50,000.If a large facility is built and demand is high, the estimated net present value is $800,000. If demandturns out to be low, the net present value will be – $10,000.The probability that demand will be high is estimated to be .60, and the probability of low demandis estimated to be .40.a. Analyze using a tree diagram.
- A firm that plans to expand its product line must decide whether to build a small or a large facilityto produce the new products. If it builds a small facility and demand is low, the net present valueafter deducting for building costs will be $400,000. If demand is high, the firm can either maintainthe small facility or expand it. Expansion would have a net present value of $450,000, and maintaining the small facility would have a net present value of $50,000.If a large facility is built and demand is high, the estimated net present value is $800,000. If demandturns out to be low, the net present value will be – $10,000.The probability that demand will be high is estimated to be .60, and the probability of low demandis estimated to be .40. 1- Compute the EVPI 2- Determine the range over which each alternative would be best in terms of the value of P ( low demand )Maximize z= 5R+8P Subject to R+3/2P≤900 1/2R+1/3P≤300 1/8R+1/4P≤100 R,P ≥ 0 non-binding constraint: R+(3/2) P≤900 binding constraints: (1/8) R+(1/4) P≤100 and (1/2) R+(1/3) P≤300 redundant constraint R+(3/2) P≤900 1. What is the range of the coeficient, c1, of the decision variable R that will make the optimal solution remain unchange? a. 13/3≤c1≤7 b. 10/3≤c1≤10 c. 4≤c1≤12 d. 13/2≤c1≤19/2 2. What is the range of the coeficient, c2, of the decision variable P that will make the optimal solution remain unchange? a. 13/3≤c1≤7 b. 10/3≤c1≤10 c. 4≤c1≤12 d. 13/2≤c1≤19/2The CEO of Lucky Petroleum Co. has been considering to open a new gasoline statioin. He must decide how large the station should be. The annual returns (IDR billions) will depend on both the size of the station and market factor. After a careful analysis he developed the following table: Size of Station Good Market Fair Market Poor Market Small 50 20 -10 Medium 70 30 -20 Large 100 50 -30 Probability 0.5 0.3 0.2 Compute the expected value of each alternative size of station, and select the best decision. Construct the opportunity loss table and determine the best decision. Compute the expected value of perfect information.
- During the year, Brownout Company experienced the following power outages:Number of Power Outages Per Month Number of Months 0 3 1 2 2 4 3 3 12Each power outage results in out of pocket costs of P400. For P500 per month, the company can lease an auxiliary generator to provide power during outages. If the company leases an auxiliarygenerator next year, the estimated savings (or…What combination of x and y will yield the optimum for this problem? Maximize $10x + $4y, subject to (1) 5x + 3y ≤ 15 and (2) 3x + 6y ≤ 18 and (3) x, y ≥ 0.A battery manufacturing plant has been ordered to cease discharging acidic waste liquids containing mercury into the city sewer system. As a result, the firm must now adjust the pH and remove the mercury from its waste liquids. Quotations from three firms are included in the following table of costs. Bidder Installed Cost Annual Operating Cost Annual Income from Mercury Recovery Salvage Value Foxhill $ 70,000 $5000 $6500 $10,000 Instrument Quicksilver 50,000 5000 2500 0 Almaden 90,000 5000 7800 10,000 If the installation will last 15 years and money is worth 12%, which equipment should be purchased?
- Briefly explain these terms:a. Basic variableb. Shadow pricec. Range of feasibilityd. Range of optimalityUse the information below to answer question 2x + 3y + 3z = 2 4x – 3y – 6z = 2 10x – 6y + 3z = 0 1. Given values – 144, -192, and 96 for Dx, Dy, and Dz respectively and D = 144. Then the solution to the system for x, y and z are: A. -1, -1.33, and 0.67 B. -0.47, -0.63 and 0,30 C. 0.5, 0.67 and-0.33 D. 0.73, 0.98 and -0.4919. What combination of x and y will yield the optimum for this problem? Maximize $3x + $15y, subject to (1) 2x + 3y ≤ 12 and (2) 5x + 2y ≤ 10 and (3) x, y ≥ 0. Part 2 A. x = 0, y = 3 B. x = 2, y = 0 C. x = 0, y = 0 D. x = 0, y = 4 E. x = 1, y = 5