A manager has compiled estimated costs for various capacity alternatives but is reluctant to assign probabilities to thestates of nature. Assuming the values in the payoff table are estimated costs and the goal is to minimize expected costs.STATE OF NATUREA $Alternative Bс# 1multiple choiceAlternative AAlternative BAlternative CNone20120100*#21408040*Cost in $ thousands.a. Is there any alternative that would never be appropriate in terms of minimizing expected cost?b. For what range of P(2) would alternative A be the best choice if the goal is to minimize expected cost?c. For what range of P (1) would alternative A be the best choice if the goal is to minimize expected cost?

a. Is there any alternative that would never be appropriate in terms of minimizing expected cost? multiple choice Alternative A Alternative B Alternative C None b. For what range of P (2) would alternative A be the best choice if the goal is to minimize expected cost? c. For what range of P (1) would alternative A be the best choice if the goal is to minimize expected cost?

a. Is there any alternative that would never be appropriate in terms of minimizing expected cost? multiple choice Alternative A Alternative B Alternative C None b. For what range of P (2) would alternative A be the best choice if the goal is to minimize expected cost? c. For what range of P (1) would alternative A be the best choice if the goal is to minimize expected cost?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A manager has compiled estimated costs for various capacity alternatives but is reluctant to assign probabilities to the
states of nature. Assuming the values in the payoff table are estimated costs and the goal is to minimize expected costs.
STATE OF NATURE
A $
Alternative B
с
# 1
multiple choice
Alternative A
Alternative B
Alternative C
None
20
120
100
*
#2
140
80
40
*Cost in $ thousands.
a. Is there any alternative that would never be appropriate in terms of minimizing expected cost?
b. For what range of P(2) would alternative A be the best choice if the goal is to minimize expected cost?
c. For what range of P (1) would alternative A be the best choice if the goal is to minimize expected cost?

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