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a). If he uses the maximin criterion, which size bus will he decide to purchase? b). If he uses the minimax regret criterion, which size bus will he decide to purchase? c). If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what is the expected annual profit for the bus that he will decide to purchase?

a). If he uses the maximin criterion, which size bus will he decide to purchase? b). If he uses the minimax regret criterion, which size bus will he decide to purchase? c). If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what is the expected annual profit for the bus that he will decide to purchase?

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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quare 0.483 0.474 4. The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in S000) will vary depending upon whether passenger demand is low, moderate, or high, as follows: Bus LOW 50 40 20 DEMAND MEDIUM HIGH 70 90 120 Small 60 Medium 80 Large 50 a). If he uses the maximin criterion, which size bus will he decide to purchase? b). If he uses the minimax regret criterion, which size bus will he decide to purchase? c). If he feels the chances of low, moderate, and high demand are 30%, 30 %, and 40% respectively, what is the expected annual profit for the bus that he will decide to purchase? d). If he feels the chances of low, moderate, and high demand are 30%, 30 %, and 40% respectively, what is his expected value of perfect information?
Transcribed Image Text:quare 0.483 0.474 4. The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in S000) will vary depending upon whether passenger demand is low, moderate, or high, as follows: Bus LOW 50 40 20 DEMAND MEDIUM HIGH 70 90 120 Small 60 Medium 80 Large 50 a). If he uses the maximin criterion, which size bus will he decide to purchase? b). If he uses the minimax regret criterion, which size bus will he decide to purchase? c). If he feels the chances of low, moderate, and high demand are 30%, 30 %, and 40% respectively, what is the expected annual profit for the bus that he will decide to purchase? d). If he feels the chances of low, moderate, and high demand are 30%, 30 %, and 40% respectively, what is his expected value of perfect information?
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