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the following information to answer multiple-choice Qu engineer develops a new product. Having made the pre res. He/she can either manufacture the product or allow s be paid on a royalty basis, or alternatively, he/she can sel O sum. profit that can be expected depends on the level of sales babilities, shown in the table QI below, in thousands of £'s. High Sales. (Probability-0.2) Medium Sales. Manufacture 09 1 08 Take Royalties Sell all rights 09 Table QI g the Maximax decision criterion, the best decision is: Manufacture Take Royalties Sell all rights Manufacture, because it produces the highest average profit am ng the Maximin decision criterion, the best decision is: Manufacture Take Royalties Sell all rights Sell all rights, because its lowest profit is the highest amongst ng the Minimax decision criterion, the best decision is: Manufacture Take Royalties Sell all rights Mail Order, because it has the highest opportunity loss ing the Hurwics criterion and alpha equal to 0.6, the best decision Manufacture Take Royalties Sell all rights O Mail Order, because it produces the ghest average profit amor sing Maximise Expected Monetary Value (EMV) criterion, the best O Manufacture -) Take Royalties =) Sell all rights 3) Any one of the three options

the following information to answer multiple-choice Qu engineer develops a new product. Having made the pre res. He/she can either manufacture the product or allow s be paid on a royalty basis, or alternatively, he/she can sel O sum. profit that can be expected depends on the level of sales babilities, shown in the table QI below, in thousands of £'s. High Sales. (Probability-0.2) Medium Sales. Manufacture 09 1 08 Take Royalties Sell all rights 09 Table QI g the Maximax decision criterion, the best decision is: Manufacture Take Royalties Sell all rights Manufacture, because it produces the highest average profit am ng the Maximin decision criterion, the best decision is: Manufacture Take Royalties Sell all rights Sell all rights, because its lowest profit is the highest amongst ng the Minimax decision criterion, the best decision is: Manufacture Take Royalties Sell all rights Mail Order, because it has the highest opportunity loss ing the Hurwics criterion and alpha equal to 0.6, the best decision Manufacture Take Royalties Sell all rights O Mail Order, because it produces the ghest average profit amor sing Maximise Expected Monetary Value (EMV) criterion, the best O Manufacture -) Take Royalties =) Sell all rights 3) Any one of the three options

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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40 II Use the following information to answer multiple-choice Questions 1 to 10. An engineer develops a new product. Having made the product, he/she has three choices. He/she can either manufacture the product or allow someone else to make it and be paid on a royalty basis, or alternatively, he/she can sell the rights to receive a lump sum. I. The profit that can be expected depends on the level of sales with the corresponding probabilities, shown in the table QI below, in thousands of £'s. Low Sales. High Sales. (Probability-0.2) Medium Sales. (Probability-D0.3) Manufacture 09 1 08 Take Royalties Sell all rights 00 09 Table QI 1. Using the Maximax decision criterion, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Manufacture, because it produces the highest average profit among the three options 2. Using the Maximin decision criterion, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Sell all rights, because its lowest profit is the highest amongst the three options 3. Using the Minimax decision criterion, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Mail Order, because it has the highest opportunity loss 4. Using the Hurwics criterion and alpha equal to 0.6, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Mail Order, because it produces the highest average profit among the three options 5. Using Maximise Expected Monetary Value (EMV) criterion, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Any one of the three options e here to search
Transcribed Image Text:40 II Use the following information to answer multiple-choice Questions 1 to 10. An engineer develops a new product. Having made the product, he/she has three choices. He/she can either manufacture the product or allow someone else to make it and be paid on a royalty basis, or alternatively, he/she can sell the rights to receive a lump sum. I. The profit that can be expected depends on the level of sales with the corresponding probabilities, shown in the table QI below, in thousands of £'s. Low Sales. High Sales. (Probability-0.2) Medium Sales. (Probability-D0.3) Manufacture 09 1 08 Take Royalties Sell all rights 00 09 Table QI 1. Using the Maximax decision criterion, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Manufacture, because it produces the highest average profit among the three options 2. Using the Maximin decision criterion, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Sell all rights, because its lowest profit is the highest amongst the three options 3. Using the Minimax decision criterion, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Mail Order, because it has the highest opportunity loss 4. Using the Hurwics criterion and alpha equal to 0.6, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Mail Order, because it produces the highest average profit among the three options 5. Using Maximise Expected Monetary Value (EMV) criterion, the best decision is: a) Manufacture b) Take Royalties c) Sell all rights d) Any one of the three options e here to search
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