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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
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...
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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?
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?
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