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What is the expected value for expected outcome B (renovate existing store)? A. $200,000 B. $600,000 C.50 D. $100,000

What is the expected value for expected outcome B (renovate existing store)? A. $200,000 B. $600,000 C.50 D. $100,000

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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25. An owner has operated a pet supply store in the same location for more than 20 years. The business has grown each year, and now it must be decided whether to move to a new location across town or renovate the existing store. The owner has just learned that the largest competitor, located across town, has gone out of business. The owner is certain that sales will increase regardless of whether the business is moved or renovated but also realizes that many of the competitor's customers may now be willing to drive to the existing location. The following is a decision tree demonstrating the combined potential sales and probabilities for the two outcomes. Decision: Move to new store or renovate existing store? B. $600,000 C.50 Move to new store D. $100,000 Renovate existing store Increase sales $1,000,000 no increase in sales $1.00- $500,000 $100,000 Probability 0.25 Probability 0.75 Probability 0. 0.25 What is the expected value for expected outcome B (renovate existing store)? A. $200,000 Probability C 0.75 Expected outcome A Expected outcome B
Transcribed Image Text:25. An owner has operated a pet supply store in the same location for more than 20 years. The business has grown each year, and now it must be decided whether to move to a new location across town or renovate the existing store. The owner has just learned that the largest competitor, located across town, has gone out of business. The owner is certain that sales will increase regardless of whether the business is moved or renovated but also realizes that many of the competitor's customers may now be willing to drive to the existing location. The following is a decision tree demonstrating the combined potential sales and probabilities for the two outcomes. Decision: Move to new store or renovate existing store? B. $600,000 C.50 Move to new store D. $100,000 Renovate existing store Increase sales $1,000,000 no increase in sales $1.00- $500,000 $100,000 Probability 0.25 Probability 0.75 Probability 0. 0.25 What is the expected value for expected outcome B (renovate existing store)? A. $200,000 Probability C 0.75 Expected outcome A Expected outcome B
32. Step A (3 days) Rased on the Step B (2 days) Step C Step D Step E Step F (6 days) Step G (3 days) Based on the above network of activities, what is the value tor step C, If path A-C-F-G has a total completion time of 21 days? A. 8 days B. 9 days C. 7 days D. 6 days
Transcribed Image Text:32. Step A (3 days) Rased on the Step B (2 days) Step C Step D Step E Step F (6 days) Step G (3 days) Based on the above network of activities, what is the value tor step C, If path A-C-F-G has a total completion time of 21 days? A. 8 days B. 9 days C. 7 days D. 6 days
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