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b) Given this payoff as shown in Table Q2: Table Q2 State of nature (Payoff in RM thousand) #1 #2 A 120 30 Alternatives B 60 40 10 110 Determine the range of P(1) for which each alternative would be best, treating the payoffs as profits and costs.

b) Given this payoff as shown in Table Q2: Table Q2 State of nature (Payoff in RM thousand) #1 #2 A 120 30 Alternatives B 60 40 10 110 Determine the range of P(1) for which each alternative would be best, treating the payoffs as profits and costs.

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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q(ii)

a) An engineer must decide how many machines of a certain type to purchase. Each machine can process 200 customers per day. One machine will result in a fixed cost of RM2,500 per day, while two machines will results in a fixed cost of RM4,300 per day. Variable costs will be RM15 per customers, and revenue will be RM55 per customer. Determine the break-even point for each range. If estimated demand is 60 – 110 customers per day, how many machines should be purchased? b) Given this payoff as shown in Table Q2: Table Q2 State of nature (Payoff in RM thousand) #1 #2 A 120 30 Alternatives 60 40 10 110 Determine the range of P(1) for which each alternative would be best, treating the payoffs as profits and costs.
Transcribed Image Text:a) An engineer must decide how many machines of a certain type to purchase. Each machine can process 200 customers per day. One machine will result in a fixed cost of RM2,500 per day, while two machines will results in a fixed cost of RM4,300 per day. Variable costs will be RM15 per customers, and revenue will be RM55 per customer. Determine the break-even point for each range. If estimated demand is 60 – 110 customers per day, how many machines should be purchased? b) Given this payoff as shown in Table Q2: Table Q2 State of nature (Payoff in RM thousand) #1 #2 A 120 30 Alternatives 60 40 10 110 Determine the range of P(1) for which each alternative would be best, treating the payoffs as profits and costs.
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