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Chris Suit is administrator for Lowell Hospital. She is trying to determine whether to build a large wing on the existing hospital, a small wing, or no wing at all. If the population of Lowell continues to grow, a large wing could return $150,000 to the hospital each year. If a small wing were built, it would return $100,000 to the hospital each year if the population continues to grow. If the population of Lowell remains the same, the hospital would encounter a loss of $85,000 with a large wing and a loss of $45,000 with a small wing. Unfortunately, Suit does not have any information about the future population of Lowell. a. Assuming that each state of nature has the same likelihood, determine the best alternative. [Select] what is the EMV? [Select] b. If the likelihood of growth is .4 and that of remaining the same is .6 and the decision criterion is expected monetary value, which decision should Suit make? [Select] what is the EMV? [Select] "

Chris Suit is administrator for Lowell Hospital. She is trying to determine whether to build a large wing on the existing hospital, a small wing, or no wing at all. If the population of Lowell continues to grow, a large wing could return $150,000 to the hospital each year. If a small wing were built, it would return $100,000 to the hospital each year if the population continues to grow. If the population of Lowell remains the same, the hospital would encounter a loss of $85,000 with a large wing and a loss of $45,000 with a small wing. Unfortunately, Suit does not have any information about the future population of Lowell. a. Assuming that each state of nature has the same likelihood, determine the best alternative. [Select] what is the EMV? [Select] b. If the likelihood of growth is .4 and that of remaining the same is .6 and the decision criterion is expected monetary value, which decision should Suit make? [Select] what is the EMV? [Select] "

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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Chris Suit is administrator for Lowell Hospital. She is trying to determine whether to build a large wing on the existing hospital, a small wing, or no wing at all. If the population of Lowell continues to grow, a large wing could return $150,000 to the hospital each year. If a small wing were built, it would return $100,000 to the hospital each year if the population continues to grow. If the population of Lowell remains the same, the hospital would encounter a loss of $85,000 with a large wing and a loss of $45,000 with a small wing. Unfortunately, Suit does not have any information about the future population of Lowell. a. Assuming that each state of nature has the same likelihood, determine the best alternative. [Select ] what is the EMV? [Select] b. If the likelihood of growth is .4 and that of remaining the same is .6 and the decision criterion is expected monetary value, which decision should Suit make? [Select] what is the EMV? [Select]
Transcribed Image Text:Chris Suit is administrator for Lowell Hospital. She is trying to determine whether to build a large wing on the existing hospital, a small wing, or no wing at all. If the population of Lowell continues to grow, a large wing could return $150,000 to the hospital each year. If a small wing were built, it would return $100,000 to the hospital each year if the population continues to grow. If the population of Lowell remains the same, the hospital would encounter a loss of $85,000 with a large wing and a loss of $45,000 with a small wing. Unfortunately, Suit does not have any information about the future population of Lowell. a. Assuming that each state of nature has the same likelihood, determine the best alternative. [Select ] what is the EMV? [Select] b. If the likelihood of growth is .4 and that of remaining the same is .6 and the decision criterion is expected monetary value, which decision should Suit make? [Select] what is the EMV? [Select]
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