EBK OPERATIONS MANAGEMENT
11th Edition
ISBN: 8220103630726
Author: RENDER
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter A, Problem 11DQ
Question
11. The expected value criterion is considered to be the rational criterion on which to base a decision. Is this true? Is it rational to consider risk?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Question 6
A Discrete Probability Distribution is given below:
Class
A
B
с
D
Probability (%)
18
33
27
22
Calculate the probability that class A does NOT occur. Express your answer as a
whole number without the percentage sign (%).
A
A)decision table with probability for decision under risk
B)Best decision under emv method
QUESTION 1
Sofyan is thinking about producing a new product for his company. If the market were
favorable, he would get a return of RM100,000, but if the market were unfavorable he would
lose RM40,000. He estimates that the probability of a successful market is 0.5.
Sofyan also considering doing a survey to gather additional information about the market. The
cost of the survey is RM4,000. Furthermore, the revised probability for a favorable market
given the survey result is positive is 0.73. The probability of a favorable market given that the
survey result is negative is 0.22. The probability that the survey will result in a positive market
is 0.55.
a) Draw a decision tree to represent the above problem.
b) Determine the optimal decision that Sofyan should make.
c) Compute the expected value of sample information and explain the value obtained.
Chapter A Solutions
EBK OPERATIONS MANAGEMENT
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...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- Question 3 The rational decision making model is most commonly applied to O programmed decisions. O uriprogrammed decisions O neither programmed nor unprogrammed decisions both neither programmed and unprogrammed decisions.arrow_forwardA decision situation can be expressed as either a payoff table or a decision tree diagram. Question 30 options: True Falsearrow_forwardQUESTION 2 Searching for ways to cut costs and increase profit, one of the industrial engineers at Home Comfort Furniture Manufacturers, Inc. determined that the equivalent annual worth of an existing machine over its remaining useful life of 2 years is $-65,000 per year. The IE also determined that used machines like the one currently in use are not available any longer, but the defender can be replaced with a challenger that is more advanced. It will have an AW of $-78,550 if it is kept for 2 years or less, $-72,075 if it is kept between 3 and 4 years, and $-65,000 if it is kept for 5 to 10 years. If the company uses a specified 3-year planning horizon and an interest rate of 14% per year. Using Replacement Study, select: a. Replace now with challenger for all 3 years b. Keep the defender for 2 years and then replace it with the challenger for 1 year c. Keep the defender for 1 years and then replace it with the challenger for 2 yearsarrow_forward
- Which of the following is not a benefit of risk mapping and prioritisation? Question 5 options: Risk maps are key graphical representations of the variance in risk appetites across different divisions within an organisation. Ranking risks by their level of severity helps an organisation determine the optimal allocation of resources devoted to risk response or treatment. Helps the organisation identify how certain risks can offset other risks to ensure that the enterprise maintains an overall risk profile that remains within risk capacity. The results help an enterprise to communicate better its risk aggregated risk profile to key external stakeholders.arrow_forwardQUESTION 4 The Nitro Fertilizer Company is developing a new fertilizer. If Nitro markets the product and it is successful, the company will earn a $50,000 profit; if it is unsuccessful, the company will lose$35,000. In the past, similar products have been successful 60% of the time. At a cost of $5,000,3 the effectiveness of the new fertilizer can be tested. If the test result is favorable and Nitro markets the product, there is an 80% chance that the fertilizer will be successful. If the test result is unfavorable and Nitro markets the product, there is only a 30% chance that the fertilizer will be successful. There is a 60% chance of a favorable test result and a 40% chance of an unfavorable test result. Use a decision tree to determine how to maximize this company’s expected profit. (Draw the decision tree for this problem; determine Nitro’s optimal strategy, and the expected profit.)arrow_forwardPleasearrow_forward
- Previous Problem Problem List Next Problem (1 point) Using diaries for many weeks, a study on the lifestyles of visually impaired students was conducted. The students kept track of many lifestyle variables including how many hours of sleep obtained on a typical day. Researchers found that visually impaired students averaged 9.2 hours of sleep, with a standard deviation of 2.24 hours. Assume that the number of hours of sleep for these visually impaired students is normally distributed. (a) What is the probability that a visually impaired student gets less than 6.4 hours of sleep? answer: (b) What is the probability that a visually impaired student gets between 6.2 and 8.84 hours of sleep? answer: (c) Thirty percent of students get less than how many hours of sleep on a typical day? answer: hours Note: You can earn partial credit on this problem. Preview My Answers Submit Answers You have attempted this problem 0 times. You have unlimited attempts remaining.arrow_forwardQ4. RKE & Associates is considering the purchase of a building it currently leases for $30,000 per year. The owner of the building put it up for sale at a price of $170,000, but because the firm has been a good tenant, the owner offered to sell it to RKE for a cash price of $160,000 now. If purchased now, how long will it be before the company recovers its investment at an interest rate of 15% per year?(Do not use excel)arrow_forwardQuestion 3 A frequency distribution is given below: Class A B с D Frequency 7 9 9 Calculate the probability of class C occurring using the Relative Frequency method. Express your answer as an decimal rounded to two (2) decimal places.arrow_forward
- Hypothesis statements for the thesis on "Evaluating the importance of risk management mechanism in the banking sector from a customer's perspective"arrow_forwardDecision Table with Conditional Values for Happy Company: Product Market Condition and Payoff (RM) Favourable Stable Unfavourable 8,000 5,000 7,000 6,000 3,000 6,000 -5,000 -1,200 -1,000 A В C Do Nothing Probability 0.4 0.3 0.3 Opportunity loss table for Happy Company.: MARKET CONDITION AND PAYOFF (RM) MAXIMUM IN PRODUCT FAVOURABLE STABLE UNFAVOURABLE A ROW (RM) 5,000 5,000 3,000 A 3,000 3,000 1,200 1,000 8,000 1,000 1,000 Do Nothing Probability 8,000 6,000 0.3 0.4 0.3 Based on the above data answer the following questions: (a) Construct the expected opportunity loss table for Happy Sdn. Bhd. (b) State the best decision (value and product) under EOL method.arrow_forwardQuestion 3: Compute the probability of randomly drawing 7 cards from a deck of cards by getting 4 Hearts and 3 Aces. What would be the Expected Monetary Value (EMV) if 400 USD is paid the moment all of these cards are drawn? Write the implication of the EMV.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.
Forecasting 2: Forecasting Types & Qualitative methods; Author: Adapala Academy & IES GS for Exams;https://www.youtube.com/watch?v=npWni9K6Z_g;License: Standard YouTube License, CC-BY
Introduction to Forecasting - with Examples; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=98K7AG32qv8;License: Standard Youtube License