Answered: Hillary’s Flight Operations offers…

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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Question

Hillary’s Flight Operations offers maintenance and repair services for business jets located in Atlanta. They are considering whether they should expand their operations. Hillary has decided that they have a number of options—four to be precise. They can keep their current facilities; they can modify their facilities to make them more efficient; they can expand their current facility; or they can rent additional space. The decision as to which option they should select is predicated upon the estimation of the direction of the economy for the next four years. Hillary’s Flight Operations developed the following decision matrix. What option should Hillary’s Flight Operations make based on Maximax criterion?

	Future Air Traffic
Alternatives	Down	Same	Up
Keep As Is	($40,000)	$70,000	$100,000
Remodel	($60,000)	$65,000	$200,000
Expansion	($150,000)	$50,000	$400,000
Rent	($50,000)	$60,000	$80,000