1) A worker travels between her home and work. She has multiple routes that can be taken. Her first route (route A) typically takes 60 minutes, and the second route (route B) typically takes 45 minutes. If there is traffic on route A, then the route will take 70 minutes. If there is traffic on route B, then this increases to 90 minutes. Route A has a traffic delay probability of .20 and route B probability is .30. a. What is the recommended route utilizing the expected value approach? b. If utilities are to be assigned to the travel times, what is the appropriate lottery? C. Use the lotter of part b and assume the decision maker expresses indifference probabilities of: P = 0.80 for 60 minutes P = 0.60 for 70 minutes %3D What route should the decision maker select? Is the decision maker a risk taker or a risk avoider?
1) A worker travels between her home and work. She has multiple routes that can be taken. Her first route (route A) typically takes 60 minutes, and the second route (route B) typically takes 45 minutes. If there is traffic on route A, then the route will take 70 minutes. If there is traffic on route B, then this increases to 90 minutes. Route A has a traffic delay probability of .20 and route B probability is .30. a. What is the recommended route utilizing the expected value approach? b. If utilities are to be assigned to the travel times, what is the appropriate lottery? C. Use the lotter of part b and assume the decision maker expresses indifference probabilities of: P = 0.80 for 60 minutes P = 0.60 for 70 minutes %3D What route should the decision maker select? Is the decision maker a risk taker or a risk avoider?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
answer in 30 minutes.
Transcribed Image Text:1) A worker travels between her home and work.
She has multiple routes that can be taken. Her first
route (route A) typically takes 60 minutes, and the
second route (route B) typically takes 45 minutes. If
there is traffic on route A, then the route will take 70
minutes. If there is traffic on route B, then this
increases to 90 minutes. Route A has a traffic delay
probability of .20 and route B probability is .30.
a. What is the recommended route utilizing the
expected value approach?
b. If utilities are to be assigned to the travel
times, what is the appropriate lottery?
C. Use the lotter of part b and assume the
decision maker expresses indifference probabilities
of:
P = 0.80 for 60 minutes
P = 0.60 for 70 minutes
%3D
%3D
What route should the decision maker select? Is the
decision maker a risk taker or a risk avoider?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
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
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.