Spreadsheet Modeling and Decision Analysis: A Practical Introduction to Business Analytics
7th Edition
ISBN: 9781285418681
Author: Cliff Ragsdale
Publisher: Cengage Learning
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Chapter 4, Problem 9QP
Summary Introduction
To determine: The sensitivity report using solver.
a)
Summary Introduction
To determine: The price drop of watermelons for the given condition.
b)
Summary Introduction
To determine: The price increase of cantaloupes for the given condition.
c)
Summary Introduction
To determine: Whether the solution is optimal for the given condition.
d)
Summary Introduction
To determine: The acres that the farmer should lease and the maximum amount to be paid.
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You are the manager of GearNet and must decide how many Internet hubs to produce to maximize your firm’s profit. GearNet and its only rival (NetWorks) sell dual-speed Internet hubs that are identical from consumers’ perspectives. The market price for hubs depends on the total quantity produced by the two firms. A survey reveals that the market price of the hubs depends on total market output as follows:
Combined Hub Production of GearNet and NetWorks
Market Price of Hubs (per unit)
500 units
$120
750 units
$100
1,000 units
$90
GearNet and NetWorks each use labor, materials, and machines to produce output. GearNet purchases labor and materials on an as-needed basis; its machines were purchased three years ago and are being depreciated according to the straight-line method. GearNet’s accounting department has provided the following data about its unit production costs:
Â
Item
GearNet’s Unit Cost for an Output of:
                    250 units…
JayZee Electronics wanted to expand its operations by considering of putting up another warehouse to
store their electronic supplies from different suppliers. The table below shows the payoff for all
alternatives available for JayZee Electronics in all 3 states of nature. The probabilities for every state of
nature is also provided.
Size of the Warehouse
Good Market ($)
Fair Market ($)
Poor Market ($)
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40,000
-10,000
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18,000
Medium
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90,000
Large
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-40,000
-160,000
100,000
175,000
350,000
25,000
Probabilities
0.35
0.45
0.20
Using Decision Making under Uncertainty (Use Sheet 1 and rename it to Lastname_Uncertainty)
(a) Develop a decision table for this decision.
(b) What is the maximax decision?
(c) What is the maximin decision?
(d) What is the equally likely decision?
(e) What is the criterion of realism decision? Use an a value of 0.8.
(f) Develop an opportunity loss table.
(g) What is the minimax regret decision?
Using Decision Making under Risk (Use Sheet 1…
You are the Economic Consultant for Zuku Farms Ghana Limited. Zuku produces cowpea in a community where producers are able to switch back and forth between cowpea and groundnut depending on market conditions. Consequently, you were tasked by the management of Zuku and you estimated the demand function for cowpea as follows:
where  is the quantity of cowpea demanded in bags per month,  is the average price of cowpea in Ghana Cedis,  is the average price of groundnut in Ghana Cedis, and Y is the income of consumers. Assuming is initially GH¢31.00 per bag, Y is GH¢1001.50
Required:
Find the resulting demand function for cowpea and determine the number of bags Zuku can sell at GH¢ 45.00 per bag. Â
Management is considering increasing price of cowpea by GH¢10.00 per bag. Advise management on this price change using the concept of price elasticity of demand.
Explain why management should be worried about a reduction in the price of groundnut
Chapter 4 Solutions
Spreadsheet Modeling and Decision Analysis: A Practical Introduction to Business Analytics
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