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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. High Sales. (Probability=0.2) Medium Sales. Low Sales. (Probability=0.3) -40 Manufacture 160 80 Take Royalties Sell all rights 100 60 20 40 40 40

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. High Sales. (Probability=0.2) Medium Sales. Low Sales. (Probability=0.3) -40 Manufacture 160 80 Take Royalties Sell all rights 100 60 20 40 40 40

Elements Of Electromagnetics
Elements Of Electromagnetics
7th Edition
ISBN:9780190698614
Author:Sadiku, Matthew N. O.
Publisher:Sadiku, Matthew N. O.
ChapterMA: Math Assessment
Section: Chapter Questions
Problem 1.1MA
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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. High Sales. (Probability=0.2) 160 Medium Sales. Low Sales. (Probability=0.3) -40 Manufacture 80 Take Royalties Sell all rights 100 60 20 40 40 40 Тable 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
Transcribed Image Text: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. High Sales. (Probability=0.2) 160 Medium Sales. Low Sales. (Probability=0.3) -40 Manufacture 80 Take Royalties Sell all rights 100 60 20 40 40 40 Тable 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
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