Operations Management: Sustainability And Supply Chain Management Custom Edition For Temple University, Version 3
11th Edition
ISBN: 9781269383578
Author: HEIZER
Publisher: PEARSON
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Chapter A, Problem 10P
Summary Introduction
To determine: Which decision alternative maximizes the expected value of the payoff.
Introduction:
EMV:Expected monetary value (EMV) is expected value or payout that has different possible state of nature, each with their associated possibilities.
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Determine the course of action that has the highest expected payoff for this decision tree
The owner of Pearl Automotive Dealers is trying to decide whether to expand his current facility. If he expands and customer demand turns weak, there is a chance he could lease part of his newly constructed facility to another dealer.If he doesn’t expand and strong demand occurs, he could attempt to lease another facility across town. Analyze the decision tree in Figure A8. What is the best set of decisions and the expected payoff?
A payoff table is given as:
S1
S2
S3
D1
250
750
500
D2
300
-250
1200
D3
500
500
600
(a) What choice should be made by the optimistic decision maker?
(b) What choice should be made by the conservative decision maker?
(c) What decision should be made under minimal regret?
(d) If the probabilities of d1, d2, and d3 are .2, .5, and .3, respectively, then what choice should be made under expected value?
Chapter A Solutions
Operations Management: Sustainability And Supply Chain Management Custom Edition For Temple University, Version 3
Ch. A - Prob. 1DQCh. A - Prob. 2DQCh. A - Prob. 3DQCh. A - Prob. 4DQCh. A - Prob. 5DQCh. A - Question: 6. Explain how decision trees might be...Ch. A - Prob. 7DQCh. A - Prob. 8DQCh. A - Question 9. Identify the five steps in analyzing a...Ch. A - Prob. 10DQ
Ch. A - Question 11. The expected value criterion is...Ch. A - Question 12. When are decision trees most useful?Ch. A - Given the following conditional value table,...Ch. A - Prob. 2PCh. A - Prob. 3PCh. A - Jeffrey Helm owns a health and fitness center...Ch. A - Prob. 5PCh. A - Prob. 6PCh. A - Prob. 7PCh. A - Prob. 8PCh. A - Prob. 9PCh. A - Prob. 10PCh. A - The University of Miami bookstore stocks textbooks...Ch. A - Palmer Jam Company is a small manufacturer of...Ch. A - Prob. 13PCh. A - Prob. 14PCh. A - Prob. 15PCh. A - Prob. 16PCh. A - Prob. 17PCh. A - Prob. 18PCh. A - Prob. 19PCh. A - Philip Musa can build either a large video rental...Ch. A - Prob. 21PCh. A - Prob. 22PCh. A - Prob. 23PCh. A - Question A.24 On the opening page of Module A and...Ch. A - Question Warehouse Tenting at the Port of Miami...Ch. A - Question Warehouse Tenting at the Port of Miami...Ch. A - Question Warehouse Tenting at the Port of Miami...
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