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Even though independent gasoline stations have been having a difficult time, lan Langella been thinking about starting his own independent gasoline station. lan's problem is to decide how large his station should be. The annual returns will depend on both the size of his station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, lan developed the following table: States of Nature Size of First Station Good Market Fair Market Poor Market Small $60,000 $21.000 -$12,000 Medium S70.000 S32.000 -$18,000 Large S95,000 S32,500 -$42,000 Very Large $280,000 $24,000 -$150,000 For example, if lan constructs a small station and the market is good, he will realize a profit of S60,000. What is the Optimist decision? What is the income return for Optimist? What is the Pessimist decision? What is the income return for Pessimist? What is the Opportunist decision? What is the income return for Opportunist?

Even though independent gasoline stations have been having a difficult time, lan Langella been thinking about starting his own independent gasoline station. lan's problem is to decide how large his station should be. The annual returns will depend on both the size of his station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, lan developed the following table: States of Nature Size of First Station Good Market Fair Market Poor Market Small $60,000 $21.000 -$12,000 Medium S70.000 S32.000 -$18,000 Large S95,000 S32,500 -$42,000 Very Large $280,000 $24,000 -$150,000 For example, if lan constructs a small station and the market is good, he will realize a profit of S60,000. What is the Optimist decision? What is the income return for Optimist? What is the Pessimist decision? What is the income return for Pessimist? What is the Opportunist decision? What is the income return for Opportunist?

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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Even though independent gasoline stations have been having a difficult time, lan Langella has been thinking about starting his own independent gasoline station. lan's problem is to decide how large his station should be. The annual returns will depend on both the size of his station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, lan developed the following table: States of Nature Size of First Station Good Market Fair Market Poor Market Small S60,000 $21,000 -$12,000 Medium S70,000 $32,000 -$18,000 Large $95.000 S32,500 -$42,000 Very Large S280.000 S24,000 -S150.000 For example, if lan constructs a small station and the market is good, he will realize a profit of $60,000. What is the Optimist decision? What is the income return for Optimist? What is the Pessimist decision? What is the income return for Pessimist? What is the Oportunist decision? What is the income return for Opportunist? What is the Realist decision? State of nature of demand are 0.4, 0.3, 0.3 respectively What is the income return for Realist?
Transcribed Image Text:Even though independent gasoline stations have been having a difficult time, lan Langella has been thinking about starting his own independent gasoline station. lan's problem is to decide how large his station should be. The annual returns will depend on both the size of his station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, lan developed the following table: States of Nature Size of First Station Good Market Fair Market Poor Market Small S60,000 $21,000 -$12,000 Medium S70,000 $32,000 -$18,000 Large $95.000 S32,500 -$42,000 Very Large S280.000 S24,000 -S150.000 For example, if lan constructs a small station and the market is good, he will realize a profit of $60,000. What is the Optimist decision? What is the income return for Optimist? What is the Pessimist decision? What is the income return for Pessimist? What is the Oportunist decision? What is the income return for Opportunist? What is the Realist decision? State of nature of demand are 0.4, 0.3, 0.3 respectively What is the income return for Realist?
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