XYZ work in a small electric business in Basrah city. He had asunshine controller device. He had to decide how to market hisidea, and in the short term, his options could be summarised asselling the device locally, selling nationally through a website,entering a partnership with an existing company or selling thepatent. His returns depended on demand, which he describedas high, medium, or low.Using this simple model, he developed the matrix of potentialannual gains shown below:OptionsDemandHighMediumLowMarket locally609045Use website239078Partnership122589Sell patent303030Identify the decision taken underthe following approaches:(1) Equal probability(2) Regret(3) Hurwicz criterion.Note: The decision maker's degree of Pessimistic (a) is 0.3.

Here, in the question, there are four alternatives or options, these options are market locally, use…

Answered: Identify the decision taken under the…

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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The owner of the Party City Toronto Company must decide among building a mega centre store, building 5 new stores, or leasing 10 of their locations to another company. The profit that will result from each alternative will be determined by whether material costs remain stable, increase moderately, or increase significantly. In the payoff table below the estimated profits/losses are given in $thousands. Material Costs Stable Mega Centre Decision New Stores Leasing Determine the best decision using the Maximax decision criterion. 2130 Moderate Increase 1850 840 530 1050 940 O Decision: Mega Centre based on 2470 = max(2470,1850,1040) O Decision: Mega Centre based on 2130 = max(2130,1850,1040) Decision: Stable based on 2130 = max(2130,1050,1040) O Decision: Leasing based on 2820 = max(190,2750,2820) Significant Increase -2470 -150 1040
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( Use an excel sheet to show formulas used )
9
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Identify the decision taken under the following approaches: (1) Equal probability (2) Regret (3) Hurwicz criterion. Note: The decision maker's degree of Pessimistic (a) is 0.3.