1. The following solved problems refer to this payoff table: New Bridge Built No New Bridge 14 Alternative capacity A 1 for new store B 10 4 where A small, B = medium, and C large. Assume the payoffs represent profits. Determine the alternative that would be chosen under each of these decision criteria: a. Maximin. b. Маximax. c. Laplace. 2. Using the information in the payoff table, develop a table of regrets, and then a. Determine the alternative that would be chosen under minimax regret. b. Determine the expected value of perfect information using the regret table, assuming that the probability of a new bridge being built is .60. 3. Using the probabilities of .60 for a new bridge and 40 for no new bridge, a. Compute the expected value of each alternative in the payoff table, and identify the alternative that would be selected under the expected-value approach. b. Construct a decision tree for the problem showing expected values.

1. The following solved problems refer to this payoff table: New Bridge Built No New Bridge 14 Alternative capacity A 1 for new store B 10 4 where A small, B = medium, and C large. Assume the payoffs represent profits. Determine the alternative that would be chosen under each of these decision criteria: a. Maximin. b. Маximax. c. Laplace. 2. Using the information in the payoff table, develop a table of regrets, and then a. Determine the alternative that would be chosen under minimax regret. b. Determine the expected value of perfect information using the regret table, assuming that the probability of a new bridge being built is .60. 3. Using the probabilities of .60 for a new bridge and 40 for no new bridge, a. Compute the expected value of each alternative in the payoff table, and identify the alternative that would be selected under the expected-value approach. b. Construct a decision tree for the problem showing expected values.

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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