In the environment of increased competition, a fitness club executive is considering the purchase of additional equipment. His alternatives, outcomes, and payoffs (profits) are shown in the following table: (a). If the executive is an optimistic decision maker, which alternative will he likely choose? (b). if the executive is a pessimistic decision maker, which alternative will he likely choose? (c). Market research suggests the chance of a favorable market for fitness clubs is 76%. If the executive uses this analysis, which alternative will he likely choose? I have provided the data table for the problem.
In the environment of increased competition, a fitness club executive is considering the purchase of additional equipment. His alternatives, outcomes, and payoffs (profits) are shown in the following table: (a). If the executive is an optimistic decision maker, which alternative will he likely choose? (b). if the executive is a pessimistic decision maker, which alternative will he likely choose? (c). Market research suggests the chance of a favorable market for fitness clubs is 76%. If the executive uses this analysis, which alternative will he likely choose? I have provided the data table for the problem.
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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In the environment of increased competition, a fitness club executive is considering the purchase of additional equipment. His alternatives, outcomes, and payoffs (profits) are shown in the following table:
(a). If the executive is an optimistic decision maker, which alternative will he likely choose?
(b). if the executive is a pessimistic decision maker, which alternative will he likely choose?
(c).
I have provided the data table for the problem.
Transcribed Image Text:EQUIPMENT
Acme
Standard
High Pro
FAVORABLE UNFAVORABLE
MARKET
MARKET
$400,000
$280,000
$ 95,000
- $175,000
- $ 90,000
-$ 15,000
Expert Solution
Step 1
Given data:
| Equipment | Favorable market | Unfavorable market |
| Acme | $400,000 | -$175,000 |
| Standard | $280,000 | -$90,000 |
| High Pro | $95,000 | -$15,000 |
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