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C. For what range of P (1) would alternative A be the best choice if the goal is to maximize expected profit? Choose Alternative A if P(#1) is

C. For what range of P (1) would alternative A be the best choice if the goal is to maximize expected profit? Choose Alternative A if P(#1) is

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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C. For what range of P (1) would alternative A be the best choice if the goal is to maximize expected profit? Choose Alternative A if P(#1) is
Transcribed Image Text:C. For what range of P (1) would alternative A be the best choice if the goal is to maximize expected profit? Choose Alternative A if P(#1) is
A manager has compiled estimated profits for various capacity alternatives but is reluctant to assign probabilities to the states of nature. The payoff table is as follows: STATE OF NATURE #1 #2 А $ 40* 165 Alternative В 141 108 115 61 *Profit in $ thousands. Click here for the Excel Data File a. Is there any alternative that would never be appropriate in terms of maximizing expected profit? O 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 maximize expected profit? Answer is complete and correct. Choose Alternative A if P(#2) is greater than 0.639 O O O O
Transcribed Image Text:A manager has compiled estimated profits for various capacity alternatives but is reluctant to assign probabilities to the states of nature. The payoff table is as follows: STATE OF NATURE #1 #2 А $ 40* 165 Alternative В 141 108 115 61 *Profit in $ thousands. Click here for the Excel Data File a. Is there any alternative that would never be appropriate in terms of maximizing expected profit? O 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 maximize expected profit? Answer is complete and correct. Choose Alternative A if P(#2) is greater than 0.639 O O O O
Expert Solution
Step 1

Given -

Payoff table:

Alternative STATE OF NATURE
#1 #2
A 40 165
B 141 108
C 115 61
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