In the environment of increased competition, a fitness club executive is considering the purchase of additional equipment. They are choosing between Acme, Standard and High Pro. With new equipment they can attract new clients and increase their overall profits. The profits are dependent on the markets demand for the new equipment and brand name recognition. If they go with the Acme equipment, there profit would be $375,000 in a favorable market or -$125,000 in an unfavorable market. If they go with the Standard equipment, there profit would be $250,000 in a favorable market or -$95,000 in an unfavorable market. If they go with the High Pro equipment, there profit would be $175,000 in a favorable market or -$50,000 in an unfavorable market. a) Create a decision table and a decision tree. b) If the executive is an optimistic decision maker, which alternative will he choose? What is the payoff? c) If the executive is a pessimistic decision maker, which alternative will he choose? What is the payoff? d) Market research suggest the chance of favorable market for fitness clubs is 76%. If the executive uses analysis, which alternative will he likely choose? What is the expected payoff? e) Submit excel file
#3) In the environment of increased competition, a fitness club executive is considering the purchase of additional equipment. They are choosing between Acme, Standard and High Pro. With new equipment they can attract new clients and increase their overall profits. The profits are dependent on the markets demand for the new equipment and brand name recognition. If they go with the Acme equipment, there profit would be $375,000 in a favorable market or -$125,000 in an unfavorable market. If they go with the Standard equipment, there profit would be $250,000 in a favorable market or -$95,000 in an unfavorable market. If they go with the High Pro equipment, there profit would be $175,000 in a favorable market or -$50,000 in an unfavorable market.
a) Create a decision table and a decision tree.
b) If the executive is an optimistic decision maker, which alternative will he choose? What is the payoff?
c) If the executive is a pessimistic decision maker, which alternative will he choose? What is the payoff?
d)
e) Submit excel file
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