Your company, Drones, INC, must decide on their path forward in regard to new or expanded facilities for drone production. The table below shows the potential profits/losses for each decision alternative in each of 4 market conditions (states of nature). Note that the numbers in red (with a minus sign) are losses. NOTE: Thave provided some extra columns and rows for your computations. NÓTE THAT THE OBJECTIVE IS TO MAXIMIZE PROFIT. STATES OF NATURE FOR POTENTIAL MARKETS FOR DRONES DECISION EXCELLENT GOOD FAIR POOR ALTERNATIVES $400,000 -$200,000 -$500,000 OPEN 2 NEW PLANTS FOR PRODUCTION $600,000 $200,000 -$100,000 $300,000 OPEN 1 NEW PLANT FOR PRODUCTION $500,000 $75,000 $0 $100,000 EΧPAND CURRENT PLANT $150,000 DO NOTHING $0 $0 $0 $0

Your company, Drones, INC, must decide on their path forward in regard to new or expanded facilities for drone production. The table below shows the potential profits/losses for each decision alternative in each of 4 market conditions (states of nature). Note that the numbers in red (with a minus sign) are losses. NOTE: Thave provided some extra columns and rows for your computations. NÓTE THAT THE OBJECTIVE IS TO MAXIMIZE PROFIT. STATES OF NATURE FOR POTENTIAL MARKETS FOR DRONES DECISION EXCELLENT GOOD FAIR POOR ALTERNATIVES $400,000 -$200,000 -$500,000 OPEN 2 NEW PLANTS FOR PRODUCTION $600,000 $200,000 -$100,000 $300,000 OPEN 1 NEW PLANT FOR PRODUCTION $500,000 $75,000 $0 $100,000 EΧPAND CURRENT PLANT $150,000 DO NOTHING $0 $0 $0 $0

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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Question

Your company, Drones, INC, must decide on their path forward in regard to new or expanded
facilities for drone production. The table below shows the potential profits/losses for each
decision alternative in each of 4 market conditions (states of nature). Note that the numbers in
red (with a minus sign) are losses. NOTE: I have provided some extra columns and rows for
your computations. NOTE THAT THE OBJECTIVE IS TO MAXIMIZE PROFIT.
STATES OF NATURE FOR POTENTIAL
MARKETS FOR DRONES
DECISION
EXCELLENT GOOD
FAIR
POOR
ALTERNATIVES
OPEN 2 NEW
$600,000
$400,000 -$200,000 -$500,000
PLANTS FOR
PRODUCTION
OPEN 1 NEW
$500,000
$200,000 -$100,000 -$300,000
PLANT FOR
PRODUCTION
EXPAND
$150,000
$75,000
$0
-$100,000
CURRENT
PLANT
DO NOTHING
$0
$0
$0
$0
6.

(15) 18. Management first wants to know which decision to make if they assume each state of
nature is equally likely.

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Your company, Drones, INC, must decide on their path forward in regard to new or expanded facilities for drone production. The table below shows the potential profits/losses for each decision alternative in each of 4 market conditions (states of nature). Note that the numbers in red (with a minus sign) are losses. NOTE: I have provided some extra columns and rows for your computations. NOTE THAT THE OBJECTIVE IS TO MAXIMIZE PROFIT. STATES OF NATURE FOR POTENTIAL MARKETS FOR DRONES DECISION EXCELLENT GOOD FAIR POOR ALTERNATIVES OPEN 2 NEW $600,000 $400,000 -$200,000 -$500,000 PLANTS FOR PRODUCTION OPEN 1 NEW $500,000 $200,000 -$100,000 -$300,000 PLANT FOR PRODUCTION EXPAND $150,000 $75,000 $0 -$100,000 CURRENT PLANT DO NOTHING $0 $0 $0 $0 6.
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