Based on the conversation, assuming Vaibhav’s coefficient of realism as 0.7, answer the following questions Vaibhav: I am planning to open a CAT coaching centre in Kota, Vartika. Vartika: Is it? Have you done the market analysis? Vaibhav: Definitely. As per my analysis, there can be three market conditions; “Good”, “Fair”, and “Bad” market conditions. Vartika: What are your alternatives Vaibhav? Vaibhav: I have three alternatives: “Small”, “Medium”, and “Large” Coaching centre. Vartika: What are the expected payoffs? Vaibhav: If I open a “Small” Coaching centre, I will make a profit of 95000 and 25000, in case of good market condition and fair market condition, respectively, whereas will make a loss of 40000 for bad market condition. If I open a “Medium” Coaching centre, I will make a profit of 100000 and 37500, in case of good market condition and fair market condition, respectively, whereas will make a loss of 60000 for bad market condition. If I open a “Large” Coaching centre, I will make a profit of 120000 and 50000, in case of good market condition and fair market condition, respectively, whereas will make a loss of 110000 for bad market condition. Vartika: How do you evaluate your alternatives? Vaibhav: You know me Vartika very well. I am a pragmatic person. How do you evaluate if you would have been in my situation? Vartika: My decision would have been based on the opportunity loss. Wish you all the best, Vaibhav! 1. What is the criterion of evaluation for Vaibhav? What is the best alternative as per his criteria? What is corresponding EMV for that alternative? 2. What is the criterion of evaluation for Vartika? What is the best alternative as per her criteria? What is corresponding EMV for that alternative?
Based on the conversation, assuming Vaibhav’s coefficient of realism as 0.7,
answer the following questions
Vaibhav: I am planning to open a CAT coaching centre in Kota, Vartika.
Vartika: Is it? Have you done the market analysis?
Vaibhav: Definitely. As per my analysis, there can be three market conditions; “Good”,
“Fair”, and “Bad” market conditions.
Vartika: What are your alternatives Vaibhav?
Vaibhav: I have three alternatives: “Small”, “Medium”, and “Large” Coaching centre.
Vartika: What are the expected payoffs?
Vaibhav: If I open a “Small” Coaching centre, I will make a profit of 95000 and 25000, in
case of good market condition and fair market condition, respectively, whereas will make a
loss of 40000 for bad market condition. If I open a “Medium” Coaching centre, I will make
a profit of 100000 and 37500, in case of good market condition and fair market condition,
respectively, whereas will make a loss of 60000 for bad market condition. If I open a “Large”
Coaching centre, I will make a profit of 120000 and 50000, in case of good market condition
and fair market condition, respectively, whereas will make a loss of 110000 for bad market
condition.
Vartika: How do you evaluate your alternatives?
Vaibhav: You know me Vartika very well. I am a pragmatic person. How do you evaluate
if you would have been in my situation?
Vartika: My decision would have been based on the opportunity loss. Wish you all
the best, Vaibhav!
1. What is the criterion of evaluation for Vaibhav? What is the best alternative as per his
criteria? What is corresponding EMV for that alternative?
2. What is the criterion of evaluation for Vartika? What is the best alternative as per her
criteria? What is corresponding EMV for that alternative?
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