Question DescriptionMedStar Health is expanding into Virginia. The firm must select one location where itcan build a clinic to serve patients. The following table lists the expected profits forclinics in three locations and the expected probabilities of the two possible situations:high numbers of patients utilizing the clinic or low numbers of patients utilizing theclinic.|Question 3High (0.75)Low (0.25)$1,500,000.00 S 600,000.00$ 950,000.00 S 900,000.00$1,200,000.00 $ 200,000.00Location) Alexandria| Woodbridge2 LeesburgFind the best decision using the following: a. Develop a payoff table for this situation.b. Find the following:1. Maximax2. Maximin3. Equal likelihood4. Minimax regretc. Create a sensitivity graph comparing the different alternatives as to the probabilityof numbers of patients changes.

The payoff table will be: Location High (0.75) Low (0.25) Alexandria $15,00,000 $6,00,000…

MedStar Health is expanding into Virginia. The firm must select one location where it can build a clinic to serve patients. The following table lists the expected profits for clinics in three locations and the expected probabilities of the two possible situations: high numbers of patients utilizing the clinic or low numbers of patients utilizing the clinic. Question 3 Low (0.25) High (0.75) $1,500,000.00 $ 600,000.00 S 950,000.00 S 900,000.00 $1,200,000.00 S 200,000.00 Location ) Alexandria I Woodbridge 2 Leesburg Find the best decision using the following: a. Develop a payoff table for this situation. b. Find the following: 1. Maximax 2. Maximin 3. Equal likelihood 4. Minimax regret c. Create a sensitivity graph comparing the different alternatives as to the probability of numbers of patients changes.

MedStar Health is expanding into Virginia. The firm must select one location where it can build a clinic to serve patients. The following table lists the expected profits for clinics in three locations and the expected probabilities of the two possible situations: high numbers of patients utilizing the clinic or low numbers of patients utilizing the clinic. Question 3 Low (0.25) High (0.75) $1,500,000.00 $ 600,000.00 S 950,000.00 S 900,000.00 $1,200,000.00 S 200,000.00 Location ) Alexandria I Woodbridge 2 Leesburg Find the best decision using the following: a. Develop a payoff table for this situation. b. Find the following: 1. Maximax 2. Maximin 3. Equal likelihood 4. Minimax regret c. Create a sensitivity graph comparing the different alternatives as to the probability of numbers of patients changes.

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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Decision Theory in Operations Management

Decision theory, also known as the theory of choice, is a branch of statistics that deals with making decisions based on the probability of the occurrence of an event. The chief purpose of decision theory is to identify the best course of action for the company with maximum payoffs.

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