Concept explainers
a)
To determine: The best decision using Maximax criteria.
Introduction: Decision criteria are implied as a criterion which helps the people to make best decisions with the consideration of all logical and non-logical factors. This criteria help decision maker to come out with the best possible decision.
b)
To determine: The best decision using Minimax criteria.
c)
To determine: The best decision using Equal likelihood approach.
d)
To determine: The best decision using Equal likelihood criteria.
Introduction:
Decision criteria consider the all avenues of the benefit and cost related to each item included for making decision. The rational decision maker chooses the item which gives the best possible and maximum payoff to him.
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
Operations and Supply Chain Management, 9th Edition WileyPLUS Registration Card + Loose-leaf Print Companion
- The Americo Oil Company is considering making a bid for a shale oil development contract to be awarded by the federal government. The company has decided to bid $112 million. The company estimates that it has a 60% chance of winning the contract with this bid. If the firm wins the contract, it can choose one of three methods for getting the oil from the shale. It can develop a new method for oil extraction, use an existing (inefficient) process, or subcontract the processing to a number of smaller companies once the shale has been excavated. The results from these alternatives are as follows: Develop new process: Outcomes Probability Profit ($1,000,000s) Great success .30 $ 600 Moderate success .60 300 Failure .10 -100 Use present process: Outcomes Probability Profit ($1,000,000s) Great success .50 $ 300 Moderate success .30 200 Failure .20 -40 Subcontract: Outcome Probability Profit ($1,000,000s) Moderate success 1.00 250 The cost of preparing the contract proposal is $2 million. If…arrow_forwardXSU Spring Concert You are a member of the X University student body entertainment committee. Your committee has agreed to sponsor a spring concert. The motive behind this concert is to offer a safe alternative to Alta Vista Baby (AVB) Week‐end, a spring event in which students for X University rent houseboats to engage in heavy partying. Traditionally this occurs during the last weekend in May. Unfortunately, the partying has a long history of getting out of hand, sometimes leading to fatal accidents. After one such tragedy last spring, your committee wants to offer an alternative experience for those who are eager to celebrate the change in weather and the pending end of the school year. You have just finished a preliminary scope statement for the project (see below). You are now brainstorming potential risks associated with the project. 1. Identify potential risks associated with this project. Try to come up with at least ten different risks. 2. Perform a risk assessment to analyze…arrow_forwardA soft drink company is considering launching a ‘seasonal soda’ that will be sold for a limited duration. They are considering selling the new soda X-Mist during the upcoming summer season. The company believes, based on its limited market analysis, that there is a 0.75 probability that X-Mist will have a successful summer season and have estimated that they will receive a profit of $4 million if it is successful. If X-Mist is not successful over the summer season, the company will incur a loss of $900,000. The firm Market-Strategies can do an extensive market analysis for a fee of $35,000. Market-Strategies has demonstrated that it is 90 percent reliable in its market analysis for soft drinks, i.e., a soda that will be successful in the market will be reported as ‘Successful’ by Market-Strategies with a probability 0.9 and a soda that will not be successful in the market will be reported as ‘Fail’ by Market-Strategies with a probability of 0.9. The soft drink company must decide…arrow_forward
- A real estate investor has the opportunity to purchase land currently zoned residential. If the county board approves a request to rezone the property as commercial within the next year, the investor will be able to lease the land to a large discount firm that wants to open a new store on the property. However, if the zoning change is not approved, the investor will have to sell the property at a loss. Profits (in thousands of dollars) are shown in the following payoff table: State of Nature Rezoning Approved Rezoning Not Approved Decision Alternative S1 S2 Purchase, d1 590 -160 Do not purchase, d2 0 0 If the probability that the rezoning will be approved is 0.5, what decision is recommended?Recommended decision: What is the expected profit?Expected profit: $ fill in the blank 2 The investor can purchase an option to buy the land. Under the option, the investor maintains the rights to purchase the land anytime during the next three months while learning more…arrow_forwardThe organization has never owned hotels outside the UK before, and has hired a team of independent management consultants to advise them on how to proceed.They provided the consultants the following information during their initial meeting: A majority of their existing managers said they would like a chance to work abroad.None of their existing managers speak French fl uently.They will allow four weeks to rebrand the hotels. The new hotels must be ready to open after that time.They expect to recruit a large number of staff for the new French hotels, because more than 70 percent of the employees from the acquired organization left. They will require their managers to be fl exible and move between countries if any problems arise.Activity : Based on the information you have to date, what do you think the key priorities should be?arrow_forwardMary Mashego is the human resources manager of KZB Computers which is situated in Durban. She has decided to recruit for the position of a financial analyst by means of head-hunting. This means that Mary will have to recruit by ________________. Select one: a.placing an advertisement in the local newspaper b.visiting schools and universities to find prospective applicants c.placing an advertisement on the internet d.offering the job to someone whom the management of KZB knows personallyarrow_forward
- The purpose of the Maricopa Association of Governments (MAG) is to achieve which of the following? It is a charter government association for the county. It is an organization that receives state funds for county projects. It is a group that meets to collaborate on project ideas. It is the largest Council of Government (COG) in Arizona and is a regional planning agency for funds received from the federal government.arrow_forwardThe managers of Whitcomb Foods decide they will hire a management accountant to help them analyze the decision to expand their product line. They solicit bids from various accountants in the city and receive three proposals. In describing their qualifications for the job, the three state the following: Accountant A: “I have recently advised the symphony on how to raise money and therefore I know the local area well.” Accountant B: “I have advised several small firms on expansion plans.” Accountant C: “I have advised Patrician Juices [Whitcomb’s main competitor] and can share its experiences and insights with you.” All of the proposals have the same price. Questions: 1. As the accounting manager of Whitcomb Foods, prepare a memo recommending which accountant you would prefer to retain. Be sure to include your reasons. 2. Which, if any, of the accountants making a proposal are violating the IMA’s code of ethics? What is (are) the violation(s)?arrow_forwardYou have decided to enter into a time and materials contract with a supplier for your project. The project will require two different types of labor categories, the first which charges $200 per hour and the second which charges $175 per hour. The project requires 50 hours of the first labor category and 40 of the second. You will also purchase $5,000 of tools and equipment with no fee and $25,000 of materials with a 2% fee added on. What will you owe on this contract? $47,000 $47,500 $41,750 $47.600arrow_forward
- A company is choosing an outside firm to provide its payroll services. It has chosen four comparative categories of interest: client reviews, financial condition, IT capabilities, and government stability. These categories have been assigned weights of 20%, 10%, 40%, and 30%, respectively. Two potential providers were scored on each of those factors (see table below) using a scale of 1-10, with a score of 1 meaning worst possible and 10 meaning best possible. Using the factor-rating method, which provider should be chosen? Provider A Provider B Client reviews 2 6 Financial condition 8 4 IT capabilities 5 8 Government stability 3 1arrow_forwardLaura is the associate director of a nonprofit agency that provides assistance to children and families. She is the head of a department that focuses on evaluating the skill-building programs the agency provides to families. She reports directly to the agency leadership. As a whole, the agency has been cautious in hiring this year because of increased competition for funding. However, they have also suffered high staff turnover. Two directors, three key research staff, and one staff person from the finance department have left.Laura has a demanding schedule that requires frequent travel; however, she supervises two managers who in turn are responsible for five staff members each, Kelly and Linda. Both managers have been appointed within the last six months.Kelly has a specific background in research. She manages staff who provide research support to another department that delivers behavioral health services to youth. Kelly supports her staff and is very organized; however, she often…arrow_forwardLaura is the associate director of a nonprofit agency that provides assistance to children and families. She is the head of a department that focuses on evaluating the skill-building programs the agency provides to families. She reports directly to the agency leadership. As a whole, the agency has been cautious in hiring this year because of increased competition for funding. However, they have also suffered high staff turnover. Two directors, three key research staff, and one staff person from the finance department have left.Laura has a demanding schedule that requires frequent travel; however, she supervises two managers who in turn are responsible for five staff members each, Kelly and Linda. Both managers have been appointed within the last six months.Kelly has a specific background in research. She manages staff who provide research support to another department that delivers behavioral health services to youth. Kelly supports her staff and is very organized; however, she often…arrow_forward
- Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill EducationOperations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
- Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage LearningProduction and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.