monthly profits can be affected by future economic conditions in the area. The following table shows the monthly net operating revemue that could result from each project. ECONOMY CONDITIONS Poor Project Good Motel S15,000 Restaurant Fair $7,000 SIR,000 5,000 20,000 10,000 Theater 13,000 10,000 11,000 Determine the best investment using the following decision criteria: a) Maximax b) Maximin e) Minimax Regret d) Hurwicz (a- 0.4) Index of optimism e) Equal likelihood 3. Microchip is planning a new facility and considering a location in the following countries. Depending on the economic conditions for the next 3 years, the following costs have been estimnated (SUS million). ECONOMIIC CONDITIONS Country Same Korea 19.3 Decline Improve 21.7 15.2 19.0 China 18.5 India 17.1 17.6 19.2 14.9 Philippines 16.8 22.5 13.8 Singapore 21.2 12.5 25.0 Which altemative would be selected if a) The decision maker is an optimist (Minimin)? b) The decision maker is a pessimist (Minimaxy? e) The decision maker has an index of optimism of 0.47 d) The decision maker wants to use the Minimax regret criterion?

monthly profits can be affected by future economic conditions in the area. The following table shows the monthly net operating revemue that could result from each project. ECONOMY CONDITIONS Poor Project Good Motel S15,000 Restaurant Fair $7,000 SIR,000 5,000 20,000 10,000 Theater 13,000 10,000 11,000 Determine the best investment using the following decision criteria: a) Maximax b) Maximin e) Minimax Regret d) Hurwicz (a- 0.4) Index of optimism e) Equal likelihood 3. Microchip is planning a new facility and considering a location in the following countries. Depending on the economic conditions for the next 3 years, the following costs have been estimnated (SUS million). ECONOMIIC CONDITIONS Country Same Korea 19.3 Decline Improve 21.7 15.2 19.0 China 18.5 India 17.1 17.6 19.2 14.9 Philippines 16.8 22.5 13.8 Singapore 21.2 12.5 25.0 Which altemative would be selected if a) The decision maker is an optimist (Minimin)? b) The decision maker is a pessimist (Minimaxy? e) The decision maker has an index of optimism of 0.47 d) The decision maker wants to use the Minimax regret criterion?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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