Chapter 8, Problem 2.5C

An investor is going to purchase one of three types of real estate. The investor must decide among an apartment building, an office building, and a warehouse. The future states of nature that will determine how much profit the investor will make are good economic conditions and poor economic conditions. The profits (in $ thousands) that will result from each decision in the event of each state of nature are shown in the following table: States of Nature Decision (Purchase) Poor Economic Good Economic Conditions Conditions Apartment building 530 300 Office building 1030 -350 Warehouse 300 150 Determine the best decision using the Maximax decision criterion. O Decision: Office building based on 1030 = max(530,1030,300) O Decision: Appartment building based on 830 = max(830,680,450) O Decision: Good Economic Conditions based on 1030 = max(1030,300) O Decision: Office Bulding based on 1380 = max(830,1380,450)

A Midsize Pharmaceutical CompanyJennifer Childs is the owner and chief executive officer of a midsize global pharmaceutical company with sales offices or manufacturing plants in eight countries. At an October staff meeting she tells her managers that company profits for the year are expected to be $2,000,000 more than anticipated. She tells them she would like to reinvest this additional profit by funding projects within the company that will either increase sales or reduce costs. She asks her three key managers to get together to develop a prioritized list of potential projects and then to meet with her to “sell” her on their ideas. She mentions that they should not assume the funds will be divided equally among the three of them. She also mentions that she is willing to put all of the funds into just one project if it seems appropriate. Julie Chen, manager of product development, has had a team of scientists working on a new prescription drug. This effort has been taking much longer…

A Midsize Pharmaceutical CompanyJennifer Childs is the owner and chief executive officer of a midsize global pharmaceutical company with sales offices or manufacturing plants in eight countries. At an October staff meeting she tells her managers that company profits for the year are expected to be $2,000,000 more than anticipated. She tells them she would like to reinvest this additional profit by funding projects within the company that will either increase sales or reduce costs. She asks her three key managers to get together to develop a prioritized list of potential projects and then to meet with her to “sell” her on their ideas. She mentions that they should not assume the funds will be divided equally among the three of them. She also mentions that she is willing to put all of the funds into just one project if it seems appropriate. Julie Chen, manager of product development, has had a team of scientists working on a new prescription drug. This effort has been taking much longer…

A Midsize Pharmaceutical CompanyJennifer Childs is the owner and chief executive officer of a midsize global pharmaceutical company with sales offices or manufacturing plants in eight countries. At an October staff meeting she tells her managers that company profits for the year are expected to be $2,000,000 more than anticipated. She tells them she would like to reinvest this additional profit by funding projects within the company that will either increase sales or reduce costs. She asks her three key managers to get together to develop a prioritized list of potential projects and then to meet with her to “sell” her on their ideas. She mentions that they should not assume the funds will be divided equally among the three of them. She also mentions that she is willing to put all of the funds into just one project if it seems appropriate. Julie Chen, manager of product development, has had a team of scientists working on a new prescription drug. This effort has been taking much longer…

A car company is planning the introduction of a new electric car.  There are two options for production.  One is to produce the electric car at the company’s existing plant in Illinois, sharing production with its other products that are currently being produced there.  If the sales of the electric car are moderate, this will work out well as there is significant capacity to produce all of the products there.  However, if sales of the electric car are strong, this option would necessitate Adding a 3rd shift, which would lead to significantly higher costs. Another option is to build a new plant in Ohio.  The new plant would have sufficient capacity to meet whatever level of demand for the new car.  However, if sales of the new car not strong, the plant would be underutilized and less efficient. Since this is a new product, sales are hard to predict.  The forecast indicates there is a 60% chance of strong sales (annual sales of 100,000), and 40% chance of moderate sales (annual sales of…

A Midsize Pharmaceutical Company Jennifer Childs is the owner and chief executive officer of a midsize global pharmaceutical company with sales offices or manufacturing plants in eight countries. At an October staff meeting she tells her managers that company profits for the year are expected to be $2,000,000 more than anticipated. She tells them she would like to reinvest this additional profit by funding projects within the company that will either increase sales or reduce costs. She asks her three key managers to get together to develop a prioritized list of potential projects and then to meet with her to “sell” her on their ideas. She mentions that they should not assume the funds will be divided equally among the three of them. She also mentions that she is willing to put all of the funds into just one project if it seems appropriate. Julie Chen, manager of product development, has had a team of scientists working on a new prescription drug. This effort has been taking much longer…

A business student has $3,500 available from a summer job and has identified three potential stocks in which to invest. The cost per share and expected return over the next two years are given in the table. Complete parts a and b. A $12 $8 Stock Price/share Return/share B $16 $5 A. Amount invested in stock A B. Amount invested in stock B C. Return for each stock D. Amount invested in stock C E. Price of each stock C $25 $11 a. Identify the decision variables, objective function, and constraints in simple verbal expressions. Identify the decision variables. Select all that apply.

Raghubhai

5-21 A college student has just completed her junior year. The following table summarizes her grade-point average (GPA) for each of the past nine quarters:     Year Semester GPA  Freshman Fall 2.4  Winter 2.9  Spring 3.1  Sophomore Fall 3.2  Winter 3.0  Spring 2.9  Junior Fall 2.8  Winter 3.6  Spring 3.2  Forecast the student’s GPA for the fall semester of her senior year by using a three-period moving average.     Forecast the student’s GPA for the fall semester of her senior year by using exponential smoothing with   α=0.2  .     Which of the two methods provides a more accurate forecast? Justify your answer.