The local hiring manager Sukhwa from Target must decide whether to hire 1, 2, or 3 workers. He estimates that net revenues (in thousands) will vary with how well Hilo citizens comply with the new store COVID-19 policy. If they comply with the new policy, then hiring more workers result in excess costs.
The local hiring manager Sukhwa from Target must decide whether to hire 1, 2, or 3 workers. He estimates that net revenues (in thousands) will vary with how well Hilo citizens comply with the new store COVID-19 policy. If they comply with the new policy, then hiring more workers result in excess costs.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question D, E and F please!
Transcribed Image Text:5. The local hiring manager Sukhwa from Target must decide whether to hire 1, 2, or 3
workers. He estimates that net revenues (in thousands) will vary with how well Hilo
citizens comply with the new store COVID-19 policy. If they comply with the new policy,
then hiring more workers result in excess costs.
Low
Medium
High
# of Workers
Compliance
Compliance
50
Compliance
50
1
50
2
100
60
20
3
150
70
-10
a. As you already know Sukhwa is an extremely optimistic person, how many new
workers will he hire?
b. Today Sukhwa had an argument with his mom and is feeling extremely pessimistic,
what decision will he make?
с.
If Sukhwa chooses to minimize his maximum regret, how many new workers will
he hire?
d. If the manager is neither optimistic nor pessimistic (50:50), what decision will he
make?
e. If he thinks the chances of low, medium, and high compliance are 20%, 30%, and
50%, respectively, what are the expected net revenues for the number of workers he
will decide to hire?
f. If he thinks the chances of low, medium, and high compliance are 20%, 30%, and
50%, respectively, what is the expected value of perfect information?
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