The operations manager for a water taxi company wants to decide whether to purchase a small, medium, or large new boatfor the company. The manager estimates that the annual profits (in thousands of dollars) will vary depending upon whetherpassenger demand is low, moderate, or high, as shown in the following table.оооBoatnoneSmallMediumLow Medium4938LargeProbability 0.3Demand216082530.3High6890118If the company uses the expected value approach, which size boat will it decide to purchase?smallmediumlarge0.4

It is a decision-making method and it is calculated by multiplying the possible outcomes of an…

Answered: The operations manager for a water taxi…

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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The operations manager for a water taxi company wants to decide whether to purchase a small, medium, or large new boat for the company. The manager estimates that the annual profits (in thousands of dollars) will vary depending upon whether passenger demand is low, moderate, or high, as shown in the following table. Demand Boat Low Medium High Small 50 57 70 Medium 37 79 89 Large 17 51 119 Probability 0.3 0.3 0.4 If the company uses the expected value approach, which size boat will it decide to purchase? O small 000 medium large O none
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Cool Beans is a locally owned coffeeshop that competes with two large coffee chains, PlanetEuro and Frothies. Alicia, the owner, is considering two different marketing promotions and thinks that CLV analysis will help her decide the best course of action. An average specialty coffee drink sells for $4 and has a margin of 66%. One promotion is providing loyalty cards to her regular customers that would give them one free specialty coffee drink after 10 regular purchases. Alicia estimates that this will increase the frequency of their purchases by 16%. Currently, her customers average buying 2 specialty drinks per week.The second promotion is targeted at new customers. She would offer a free specialty drink to incoming college freshmen by providing a coupon with their orientation packages. Because of her location near the college, she expects that 330 students will come to Cool Beans for a free trial. Of those, she anticipates that 13% will become regular customers who will purchase at…

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