Suppose that A and B are roommates. Each of them can choose whether to plant flowersin the garden. If they both plant, each will get a payoff of 30. If one plants, and the otherdoes not, the one who plants will get -20 (because it is hard work) and the one who doesnot will get 45. If neither of them plants any flowers, each will get a payoff of 0.a)What outcome do you think is most likely? Why?onb)What is in common between this situation and the Prisoner's Dilemma? Why?

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Answered: Suppose that A and B are roommates.…

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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A farmer must decide whether to take protective action to limit damage to his grapefruit crop in the event that the overnight temperature falls to a level well below freezing. If the temperature drops too low he runs the risk of losing his entire crop, valued at $75,000. Based on the National Weather Service, the probability of such a temperature drop is 60%. He can insulate his crop by spraying water on all the trees, which will cost $20,000. This action might succeed in protecting the crop, with the following possible outcomes: Probability Damage 0.30 $0 0.15 $5,000 0.10 $10,000 0.15 $15,000 0.30 $20,000 Construct a decision tree to help the farmer make his decision. What should he do? Explain your answer. Find the highest cost of insulating the grapefruits for which the farmer prefers to insulate his crop. Suppose the farmer is uncertain about the reliability of the National Weather Service forecast. If he thinks the probability of…
1. Suppose that the Chess Club must vote on a restaurant to celebrate its championship in the World College Chess Tournament. Being a logical group it first sets a particular voting agenda. According to the agenda, the members first vote on Restaurant A vs Restaurant B. The winner of that vote it then pitted against Restaurant C in a majority vote. Finally, that second round winner is pitted against Restaurant D. The winner of that last vote is the chosen celebration venue.(a) Show that if the same venue results from all possible agendas, then there is no voting cycle involving the chosen venue.(b) Suppose there is no voting cycle at all. Will the same venue result from all possible agendas? Prove or provide a counterexample.
In the trust game the responder (or trustee) can choose to send some money back to the proposer (also called the investor). Which of the following is true? The total gain in the game is higher with trust. The results show that most people are purely selfish. Typically, trustees get nothing from the investors. Trust almost always pays off.
There are often disputed charges on a guest's folio (bill). Some are legit, for example room service billed the wrong room. However, how would you handle the following guest disputes and why: 1-The guest disputes $200 in phone charges because he thought it was a toll-free number. 2-The guest disputes paying $30 for parking because they feel it is unreasonable, especially when the hotel isn't even full and parking is outside. 3-The guest objects to the room service charge because the food was awful and they didn't finish it.
This game has two players: the employee (Homer) and the employer (Mr. Burns). Homer has to decide whether or not to pursue a training opportunity that will cost him $1,000. Undergoing the training will give Homer the opportunity to potentially generate additional revenue through a new business venture. Mr. Burns has to decide whether or not to pay a fixed wage to Homer of $10,000 for the new venture or to share the revenue from the new enterprise with Homer on a 50/50 split. Demand for the new venture is somewhat unpredictable. Cash flows are positively affected by both training and revenue sharing. With no training and a fixed wage, cash flow is projected to be $20,000. If either training or revenue sharing is implemented, cash flows rise to $22,000. If both training and revenue sharing are implemented, the cash flow position is even better at $25,000. Construct a pay-off matrix for this scenario. Is there a dominant strategy for both parties that results in equilibrium?…
(d) The company only has 4 workstations available. If it only operates its 4stations, how many weeks does it need to meet the production requirements?(e) The company has other contracts it needs to satisfy. Working on themugs more than 4 weeks means it will have to cancel another contract,incurring a penalty of $4,500. Each new workstation costs the company$2,500. What should the company do: cancel the contract or buy therequired workstations?
Texas Petroleum Company is a producer of crude oil that is considering two drilling projects with the following profit outcomes and associated probabilities: Drilling Project, A Profit -$300,000 100,000 500,000 600,000 Probability (percent) 10 60 20 10 Drilling Project, B Profit -$600,000 100,000 300,000 1,000,000 The manager's attitude toward risk is as follows: Profit ($'000) -600 -300 100 U(II) 0.00 0.05 0.20 Note: U(II) stands for utility index of profit. 300 0.30 500 0.45 Probability (percent) 15 25 40 20 600 0.55 1,000 1.00 In making decision under risk, which project will be chosen by the manager of Texas Petroleum Company based on his behaviour toward risk? Also describe the manager's ways of handling decision-making associate with risk. Justify your answers using numerical explanation.
A salesperson uses three different airlines. The probabilities of switching from one airline to another in consecutive flights are shown below. If the last flight was on Delta, what is the probability that the next was on American? American Delta Southwest American 0.5 0.25 0.25 Delta 0.2 0.6 0.2 Southwest 0.3 0.3 0.4 A 0.5 B 0.2 C 0.25 D 0.6
Consider a cheap talk game in which Nature chooses the sender’s type andthere are three feasible types: x, y, and z, which occur with probability 1/4, 1/4,and 1/2, respectively. The sender learns her type and then chooses one of fourpossible messages: m1, m2, m3, or m4. The receiver observes the sender’smessage and chooses one of three actions: a, b, or c. The payoffs are shown in the table below. a. Suppose the sender’s strategy is as follows: (1) if the type is x, thenchoose message m1, and (2) if the type is y or z, then choose messagem2. The receiver’s strategy is the following: (1) if the message is m1,then choose action a; (2) if the message is m2, then choose action b;and (3) if the message is m3 or m4, then choose action a. For appropriatelyspecified beliefs for the receiver, show that this strategy pair is aperfect Bayes–Nash equilibrium.b. Find a separating perfect Bayes–Nash equilibrium.
Three methods can be used for producing heat sensors for high-temperature furnaces. Method A will have a fixed cost of $140,000 per year and a production cost of $62 per part. Method B will have a fixed cost of $210,000 per year and a production cost of $28 per part. Method C will require the purchase of equipment costing $500,000. It will have a life of five years and a 25% of first cost salvage value. The production cost will be $53 per part. At an interest rate of 10% per year, determine the breakeven annual production rate between the two lowest cost methods.
Suppose the equilibrium price for good quality used cars is $20,000. And the equilibrium price for poor quality used cars is $10,000. Assume a potential used car buyer has imperfect information as to the condition of any given used car. Assume this potential buyer believes the probability a given used car is good quality is .60 and the probability a given used car is low quality is .40. Assume the seller has perfect information on all cars in inventory. If the seller sells the buyer a good quality car, what is the net-benefit to the seller? a. A net gain of $4,000. b. A net gain of $20,000. c. A net loss of $4,000. d. A net loss of $10,000.
46. You are making several runs of a simulation model,each with a different value of some decision variable(such as the order quantity in the Walton calendarmodel), to see which decision value achieves thelargest mean profit. Is it possible that one value beatsanother simply by random luck? What can you do tominimize the chance of a “better” value losing out toa “poorer” value?

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