Quarter 2Flora Co intends to expand the business to include a home delivery service. The delivery van is expected tocost $20,000 and the business has a 60% chance of the new delivery service being successful.The following decision tree has been produced to represent this decision. The final profit figures in thedecision tree are based upon whether demand is good or poor for the new delivery service.ExpandCost of van($20,000)KeyDDon'texpandDecisionOutcomeSuccess 0.6Failure 0.4ABGood 0.7Poor 0.3Good 0.2Poor 0.8$600,000$100,000$10,000$8,000$0 The expected value (EV) at decision D is $253,360.Identify, by clicking on the relevant boxes in the table below, whether the statements regardingthe decision tree are true or false.According to the decision tree the expansion toinclude a home delivery service should go aheadFlora Co can use the decision tree to identify theaverage outcome if the decision is repeatedagain and againTRUETRUEFALSEFALSE

A decision tree is a graphical representation of possible solutions to a decision based on certain…

Answered: Quarter 2 Flora Co intends to expand…

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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Molly e-mailed her clients offering a free 30-minute massage for referrals. In the following validation set of 100, Class 1 reflects the clients predicted to provide referrals and Class O reflects the clients predicted to not provide referrals. Based on the confusion matrix, what was the True Positive (TP) of current clients who provided referrals for a free massage? Actual Class Predicted Class 1 Predicted Class 0. Class 1 Class 0 Multiple Choice 28 63 19 9 9 63
A2
Snack Factory Snack Factory is the maker of Pretzel Crisps, and their effective use of product testing has gained a good recognition. This unique marketing strategy has led Snack Factory to marriage the two products - pretzel and chip, so customers are likely to buy one of the two products. But the typical American customer has tried a pretzel or a chip, and so the marketing strategy is not yielding many sales. However, statistics shows customers may be likely to try a product that they have tested before, but by focusing only on the existing markets, Snack Factory is unable to increase sales of chips and for pretzels. So, the company is looking to devise a strategy to reach wider targets, offering samples of snack foods, to new and existing customers. The Business Situation: The challenge is applying the best strategies and deployment of right resources; at the moment the small business owner has 25 sales representative, 2 HR personnel's, and would need to consult the services of…
Zeus Computer Chips, Incorporated used to have major contracts to produce the Centrino-type chips. The market has been declining during the past three years because of the quad-core chips, which it cannot produce, so Zeus has the unpleasant task of forecasting next year. The task is unpleasant because the firm has not been able to find replacement chips for its product lines. Here is demand over the past 12 quarters: QUARTER TWOYEARS AGO DEMAND QUARTER LASTYEAR DEMAND QUARTER THISYEAR DEMAND 1 4,800 1 3,500 1 3,200 2 3,500 2 2,700 2 2,100 3 4,300 3 3,500 3 2,700 4 3,000 4 2,400 4 1,700 Use the regression and seasonal indexes to forecast demand for the next four quarters. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Period Forecast 1 2 3 4
Construct a decision tree for this problem. What is the recommended decision if the agency opinion is not used? What is the expected value? What is the expected value of perfect information? What is Hale’s optimal decision strategy assuming the agency’s information is used? What is the expected value of the agency’s information? Is the agency’s information worth the $5000 fee? What is the maximum that Hale should be willing to pay for the information? What is the recommended decision?
A store has the following demand figures for the last four years: Year Demand 100 1 150 3 112 4 200 Given a demand forecast for year 2 of 100, a trend forecast for year 2 of 10, an alpha of 0.3, and a beta of 0.2, what is the demand forecast for year 3 using the exponential smoothing with trend method? 128 115 Ⓒ 135 Ⓒ 145
A manufacturing company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars). State of Nature Decision Low Alternative Demand $1 Medium Demand $2 High Demand 53 Manufacture, d -5 55 115 Purchase, d₂ 60 85 The state-of-nature probabilities are P(s₁) = 0.35, P(52) = 0.35, and P(53) = 0.30. (a) Use a decision tree to recommend a decision. The best decision is to purchase the component part. (b) Use EVPI to determine whether the company should attempt to obtain a better estimate of demand, assuming the estimate would come at no further cost. EVPI = 9 The EVPI suggests that the company should consider an attempt to obtain a better estimate of demand. (c) A test market study of the potential demand for the product is expected to report either a favorable (F) or…
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Hi, need help solving for part B. Thank you.
Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Demand Volume Decision Low Medium High Basic model $65,000 $100,000 $180,000 Advanced model $55,000 $105,000 $205,000 Fill in the table below for maximum and minimum profit payoffs under each model. Round your answers to the nearest dollar. Decision alternative Maximum Minimum Basic model $ $ Advanced model $ $ Calculate the amounts foregone by not adopting the optimal course of action for each possible demand level. Determine the maximum opportunity cost for each model. Fill in the table below. If your answer is zero, enter "0". Round your answers to the nearest dollar. Opportunity Loss Matrix Future events Decision alternative Low Medium High Maximum Basic…
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Come up with a decision using MINIMAX REGRET CRITERION under conditions of uncertainty using the table below. The payoff values are expressed as LOSSES.Which decision alternative has the minimum payoff value of the maximum regret? Choices: -> A,B,C-> C,D,E-> E,F,G-> B,F,G-> C,G,F

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