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5. Recommend a decision based on the use of the optimistic, conservative and minimax regret approaches

5. Recommend a decision based on the use of the optimistic, conservative and minimax regret approaches

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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Please send the 5th sub parts until the last one

Great Corporations's decision to produce a new line of recreational products resulted in the need to construct either a small plant or large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decid3d to view the possible long-run demand as low, medium and high. Under low long-run demand, small plant size has payoff of P150 and large plant size has P50 payoffr. Small plant size has payoffs of P200 in medium long-run demand. While large plant size has equal payoff with small size plant in case of medium long-run demand, large plant size projects a payoff P300 higher than that of the small plant size. 1. Construct the payoff table. 2. What is the decision to be made? 3. What is the chance event for the corporation's problem? 4. Construct a decision tree. 5. Recommend a decision based on the use of the optimistic, conservative and minimax regret approaches.
Transcribed Image Text:Great Corporations's decision to produce a new line of recreational products resulted in the need to construct either a small plant or large plant. The best selection of plant size depends on how the marketplace reacts to the new product line. To conduct an analysis, marketing management has decid3d to view the possible long-run demand as low, medium and high. Under low long-run demand, small plant size has payoff of P150 and large plant size has P50 payoffr. Small plant size has payoffs of P200 in medium long-run demand. While large plant size has equal payoff with small size plant in case of medium long-run demand, large plant size projects a payoff P300 higher than that of the small plant size. 1. Construct the payoff table. 2. What is the decision to be made? 3. What is the chance event for the corporation's problem? 4. Construct a decision tree. 5. Recommend a decision based on the use of the optimistic, conservative and minimax regret approaches.
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