(a)
Interpretation:
It is required to determine the two future states of nature the A Hotel faces.
Concept Introduction:
In many countries, hotels have evolved as extensions of the domestic hospital. The nature of the product in the hotel industry also determines that most units will be a small major objective in the face of opposition.
(a)
Explanation of Solution
Given information:
The A Hotel has the
The two future states of nature A Hotel are as follows:
- All those customers who have reservations shown up and the 56 rooms are occupied then there are no dissatisfied customers.
- But the one customer who has the reservations will show up the resulting in 55 rooms are being occupied. And the one-room is vacant, thus, there are no dissatisfied customers.
(b)
Interpretation:
The expected value of accepting the exactly
Concept Introduction:
In many countries, hotels have evolved as extensions of the domestic hospital. The nature of the product in the hotel industry also determines that most units will be a small major objective in the face of opposition.
(b)
Explanation of Solution
Given information:
The A Hotel has the
It is given that the probability
Calculate the expected value of the profits of accepting exactly
Thus, the expected value of accepting the exactly
(c)
Interpretation:
The expected value of accepting the exactly
Concept Introduction:
In many countries, hotels have evolved as extensions of the domestic hospital. The nature of the product in the hotel industry also determines that most units will be a small major objective in the face of opposition.
(c)
Explanation of Solution
Given information:
The A Hotel has the
There is a
It is given that the probability
The probability
Calculate the expected value of the profits of accepting exactly
Thus, the expected value of accepting the exactly
(d)
Interpretation:
It is required to determine that A Hotel will say yes or no, if the A Hotel already has
Concept Introduction:
In many countries, hotels have evolved as extensions of the domestic hospital. The nature of the product in the hotel industry also determines that most units will be a small major objective in the face of opposition.
(d)
Explanation of Solution
Given information:
The A Hotel has the
The A Hotel should accept for the following reasons:
The expected value
Therefore, the A Hotel will say yes to the new customer.
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Chapter 15 Solutions
Practical Operations Management
- Please complete all work in excel. Use excel to make the calculations (cells can be clicked on to view any formulas used) and be sure to identify your answer, including units. You must have an excel file with formulas within the cell. An operations manager must purchase new equipment has developed a table of conditional values for the various alternatives (equipment options) and states of nature (demand market conditions). states of nature (market conditions) Alternatives Good Average Poor X800 $38,000 $21,000 -$18,000 Y900 $33,000 $16,000 -$12,000 Z1000 $29,000 $19,000 $6,000 If the probabilities associated with the states of nature are 0.40 for a good market, 0.40 for an average market, and 0.20 for a poor market, determine: 1. the alternative that provides the greatest expected monetary value (EMV)arrow_forwardPlease complete all work in excel. Use excel to make the calculations (cells can be clicked on to view any formulas used) and be sure to identify your answer, including units. You must have an excel file with formulas within the cell An operations manager must purchase new equipment has developed a table of conditional values for the various alternatives (equipment options) and states of nature (demand market conditions). states of nature (market conditions) Alternatives Good Average Poor X800 $38,000 $21,000 -$18,000 Y900 $33,000 $16,000 -$12,000 Z1000 $29,000 $19,000 $6,000 If the probabilities associated with the states of nature are 0.40 for a good market, 0.40 for an average market, and 0.20 for a poor market, determine: 2. the expected value of perfect information (EVPI)arrow_forwardA company owns a 5-year-old turret lathe that has a book value of $23,000. The present market value for the lathe is $18,000. The expected decline in market value is $1,700/year to a minimum market value of $4,080; maintenance plus operating costs for the lathe equal $4,470/year.A new turret lathe can be purchased for $46,000 and will have an expected life of 8 years. The market value for the turret lathe is expected to equal $46,000(0.70)k at the end of year k. Annual maintenance and operating cost is expected to equal $1,900. Based on a 12% MARR, should the old lathe be replaced now? Use an equivalent uniform annual cost comparison, a planning horizon of 7 years, and the cash flow approach.EUAC for keeping old turret lathe: $EUAC for replacing turret lathe: $arrow_forward
- A swim club is designing a new pool to replace its old pool. The new pool would need to last for 10 years since the club is planning on relocating after 10 years. A concrete shell would cost $85,000 and last for all 10 years. Another option is to install a vinyl liner that would cost only $70,000 to install. However, the vinyl is not guaranteed to last for all 10 years, and it has a 40% chance of breaking down. Repair of the vinyl would cost $40,000 and would extend the life of the vinyl liner to the 10-year mark. If both options are acceptable to the swim club, which one minimizes cost? Support your answer with drawing a decision tree and provide your calculation.arrow_forwardA product engineer has developed the following equation for the cost of a system component: C = (10P) 2, where C is the cost in dollars and P is the probability that the component will operate as expected. The system is composed of two identical components, both of which must operate forthe system to operate. The engineer can spend $173 for the two components. To the nearest two decimal places, what is the largest component probability that can be achieved?arrow_forwardScenario: Imagine you are a physician who has been whose patient has the following matter up to you. The patient has an unusual infection, which lasts for a short time. The infection has a 15% chance of causing permanent brain damage. You may undertake a procedure that will prevent the brain damage from the infection (with 100% probability). However, the procedure itself has a 20% chance of causing brain damage itself. Should you undertake the procedure or not? Question: Identify whether the scenario poses a problem to solve or a decision to be made. Explain HOW and WHY you came to your answer?arrow_forward
- A weather satellite has an expected life of 10 years from the time it is placed into earth orbit. Determine its probability of no wear-out before each of the following lengths of service. Assume theexponential distribution is appropriate.a. 5 years b. 12 years c. 20 years d. 30 yearsarrow_forwardThe assumption that a system will operate in a stable environment without risk is not realistic (Sales et al., 2018). Risk is widely classified into disruption and operational risks (Kleindorfer & Saad, 2005; Tang, 2006). Extreme uncertainty and the absence of synchronization between supply and demand are linked to operational risks while circumstances such as labor strikes, terrorist attacks, and natural calamities are related to disruption risks (Lockamy & McCormack, 2010). The probability of human injury or even death is high in disruptions such as multi-casualty disasters which brings about the challenge of increased pressure on healthcare. Healthcare institutions are required to become capable of understanding and adapting to environmental changes to mitigate such unexpected changes. These unexpected changes can affect the competitiveness, responsiveness and operating procedures of a firm significantly (Huang, Yen, & Liu, 2014), and for healthcare institutions, the…arrow_forwardIn designing a new space vehicle, NASA needs to decide whether to provide 0, 1 or 2 backup systems for a critical component of the vehicle. The first backup system, if included, comes into use only if the original system fails. The second backup system, if included, comes into use only if the original system and the first backup system both fail. NASA engineers claim that each system, independent of the others, has a 1.5% chance of failing if called into use. Each backup system costs $70,000 to produce and install within the vehicle. Once the vehicle is in flight, the mission will be scrubbed (ended early) only if the original system and all backups fail. The cost of a scrubbed mission, in addition to production costs, is assessed to be $5,000,000. How many backup systems are needed to minimize NASA’s expected total cost?arrow_forward
- Consider a product that is "settled in." Its MTBF distribution has been found to be normal with a mean of 10,000 hours and a standard deviation of 100 hours. Answer the following questions: (a) Calculate the probability of a breakdown before 8,000 hours? (b) Calculate the probability of a breakdown before 9,000 hours? (c) Would you prefer a policy of “preventive maintenance” or a policy of “breakdown maintenance” on this product? Explain your choice.arrow_forwardA project will cost $45,000 to develop.• When the system becomes operational after a one-year development period, operational costs willbe $9,000 during each year of the system’s five-year useful life.• The system will produce benefits of $30,000 in the first year of operation, and this figure willincrease by a compound 10% each year.What is the payback period for this project?arrow_forwardA hospital has three independent fire alarm systems, with reliabilities of .95, .97, and .99. In the event of a fire, what is the probability that a warning would be given?arrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,