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Problem #4 - Jasper Inc. would like you to provide consulting services and provide recommendation on building a new assembly facility for air conditioning units in Florida. Jasper's initial assessment indicates the following conditions for this decision-making problem: With a favorable market in Florida, Jasper thinks that a large facility would result in a net profit of $210,000 to his firm. If the market is unfavorable in Florida, the construction of a large facility would result in $190,000 net loss. A small facility would result in a net profit of $110,000 in a favorable market, but a net loss of $25,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. Create a decision table for this problem. What is your recommendation if you would apply the Maximax criterion (Optimistic)? What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.7? e) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? What is your recommendation if would apply the Minimax Regret criterion? f) What is your recommendation if you would apply the Expected Monetary Value, assuming that the probability of a favorable market is 65% and the probability of an unfavorable market is 35%?

Problem #4 - Jasper Inc. would like you to provide consulting services and provide recommendation on building a new assembly facility for air conditioning units in Florida. Jasper's initial assessment indicates the following conditions for this decision-making problem: With a favorable market in Florida, Jasper thinks that a large facility would result in a net profit of $210,000 to his firm. If the market is unfavorable in Florida, the construction of a large facility would result in $190,000 net loss. A small facility would result in a net profit of $110,000 in a favorable market, but a net loss of $25,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. Create a decision table for this problem. What is your recommendation if you would apply the Maximax criterion (Optimistic)? What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.7? e) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? What is your recommendation if would apply the Minimax Regret criterion? f) What is your recommendation if you would apply the Expected Monetary Value, assuming that the probability of a favorable market is 65% and the probability of an unfavorable market is 35%?

Practical Management Science
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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Problem #4 – Jasper Inc. would like you to provide consulting services and provide recommendation on building a new assembly facility for air conditioning units in Florida. Jasper's initial assessment indicates the following conditions for this decision-making problem: With a favorable market in Florida, Jasper thinks that a large facility would result in a net profit of $210,000 to his firm. If the market is unfavorable in Florida, the construction of a large facility would result in $190,000 net loss. A small facility would result in a net profit of $110,000 in a favorable market, but a net loss of $25,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. a) b) c) Create a decision table for this problem. What is your recommendation if you would apply the Maximax criterion (Optimistic)? What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.7? e) f) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? What is your recommendation if would apply the Minimax Regret criterion? What is your recommendation if you would apply the Expected Monetary Value, assuming that the g) probability of a favorable market is 65% and the probability of an unfavorable market is 35%?
Transcribed Image Text:Problem #4 – Jasper Inc. would like you to provide consulting services and provide recommendation on building a new assembly facility for air conditioning units in Florida. Jasper's initial assessment indicates the following conditions for this decision-making problem: With a favorable market in Florida, Jasper thinks that a large facility would result in a net profit of $210,000 to his firm. If the market is unfavorable in Florida, the construction of a large facility would result in $190,000 net loss. A small facility would result in a net profit of $110,000 in a favorable market, but a net loss of $25,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. a) b) c) Create a decision table for this problem. What is your recommendation if you would apply the Maximax criterion (Optimistic)? What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.7? e) f) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? What is your recommendation if would apply the Minimax Regret criterion? What is your recommendation if you would apply the Expected Monetary Value, assuming that the g) probability of a favorable market is 65% and the probability of an unfavorable market is 35%?
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