Spreadsheet Modeling & Decision Analysis: A Practical Introduction To Business Analytics, Loose-leaf Version
8th Edition
ISBN: 9781337274852
Author: Ragsdale, Cliff
Publisher: South-Western College Pub
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
error_outline
This textbook solution is under construction.
Students have asked these similar questions
3. (Note: This is a variation of problem 6 of chapter 16 in your textbook.) Kenya and
Dionne live on adjacent plots of land. Each has two potential uses for their land,
the present values of each of which depend on the use adopted by the other, as
summarized in the table. All the values in the table are known to both parties.
Dionne
Rental housing
Bee keeping
Kenya
Apple
growing
A: $200
B: $700
A: $400
B: $650
Pig
farming
A: $450
B: $400
A: $450
B: $500
a. What is the efficient outcome?
b. If there are negotiation costs of $150, what activities will the two
pursue on their land?
c. If there are no negotiation costs and the two negotiate, what activities
will the two pursue on their land? How might a benevolent planner help
reduce the costs of negotiating to encourage the optimal combination
of land uses?
Which of the following is true?
a)The maximin criterion is an approach in Optimization under uncertainty which finds a solution that has the best possible payoff.
b)The maximin criterion is an approach in Optimization under uncertainty which finds a solution with the best worst possible payoff.
c)A risk profile represents the probability distribution of uncertain inputs.
d)Decision tree is a method to solve any optimization problem when the outcomes are subject to uncertainty.
Innis Investments manages funds for a number of companies and wealthy clients. The investment strategy is tailored to each client's needs.
For a new client, Innis has been authorized to invest up to $1.2 million in two investment funds: a stock fund and a money market fund. Each unit of the stock fund costs
$50 and provides an annual rate of return of 10%; each unit of the money market fund costs $100 and provides an annual rate of return of 4%.
The client wants to minimize risk subject to the requirement that the annual income from the investment be at least $60,000.
According to Innis' risk measurement system, each unit invested in the stock fund has a risk index of 8, and each unit invested in the money market fund has a risk index of
3. The higher risk index associated with the stock fund simply indicates that it is the riskier investment.
Innis's client also specified that at least $300,000 be invested in the money market fund.
Refer to the computer solution shown below.
Optimal…
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, management and related others by exploring similar questions and additional content below.Similar questions
- Seas Beginning sells clothing by mail order. An important question is when to strike a customer from the companys mailing list. At present, the company strikes a customer from its mailing list if a customer fails to order from six consecutive catalogs. The company wants to know whether striking a customer from its list after a customer fails to order from four consecutive catalogs results in a higher profit per customer. The following data are available: If a customer placed an order the last time she received a catalog, then there is a 20% chance she will order from the next catalog. If a customer last placed an order one catalog ago, there is a 16% chance she will order from the next catalog she receives. If a customer last placed an order two catalogs ago, there is a 12% chance she will order from the next catalog she receives. If a customer last placed an order three catalogs ago, there is an 8% chance she will order from the next catalog she receives. If a customer last placed an order four catalogs ago, there is a 4% chance she will order from the next catalog she receives. If a customer last placed an order five catalogs ago, there is a 2% chance she will order from the next catalog she receives. It costs 2 to send a catalog, and the average profit per order is 30. Assume a customer has just placed an order. To maximize expected profit per customer, would Seas Beginning make more money canceling such a customer after six nonorders or four nonorders?arrow_forwardIf a monopolist produces q units, she can charge 400 4q dollars per unit. The variable cost is 60 per unit. a. How can the monopolist maximize her profit? b. If the monopolist must pay a sales tax of 5% of the selling price per unit, will she increase or decrease production (relative to the situation with no sales tax)? c. Continuing part b, use SolverTable to see how a change in the sales tax affects the optimal solution. Let the sales tax vary from 0% to 8% in increments of 0.5%.arrow_forwardYou want to take out a 450,000 loan on a 20-year mortgage with end-of-month payments. The annual rate of interest is 3%. Twenty years from now, you will need to make a 50,000 ending balloon payment. Because you expect your income to increase, you want to structure the loan so at the beginning of each year, your monthly payments increase by 2%. a. Determine the amount of each years monthly payment. You should use a lookup table to look up each years monthly payment and to look up the year based on the month (e.g., month 13 is year 2, etc.). b. Suppose payment each month is to be the same, and there is no balloon payment. Show that the monthly payment you can calculate from your spreadsheet matches the value given by the Excel PMT function PMT(0.03/12,240, 450000,0,0).arrow_forward
- Long-Life Insurance has developed a linear model that it uses to determine the amount of term life Insurance a family of four should have, based on the current age of the head of the household. The equation is: y=150 -0.10x where y= Insurance needed ($000) x = Current age of head of household b. Use the equation to determine the amount of term life Insurance to recommend for a family of four of the head of the household is 40 years old. (Round your answer to 2 decimal places.) Amount of term life insurance thousandsarrow_forwardPls help ASAP for botharrow_forward(b) Indicate whether the following linear program is an all-integer linear program or a mixed-integer linear program. Max 3x1 + 4x2 s.t. 2x1 + 4x2 2 8> 2x1 + 6x2 2 12 x1, x2 2 0 and integer This is a Max s.t. Write the LP Relaxation for the problem but do not attempt to solve. If required, round your answers to one decimal place. Its LP Relaxation is 2x1 + x1, x2 linear program. xz x1 + 6x21arrow_forward
- 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.arrow_forwardPlease see attached file.arrow_forwardI need 3 answersarrow_forward
- advertisin wants for 4 months at a cost of $155 per square foot. Similarly, at the start of month 3 they can lease any amount of space for 2 months at a cost of $95 per square foot. The company wants to determine the least costly way of meeting their warehousing needs over the coming 5 months. a. Formulate an LP model for this problem. b. Create a spreadsheet model for this problem and solve it using Solver. c. What is the optimal solution? d. How much would it cost the company to meet its space needs if in each month it leases for 1 month exactly the amount of space required for the month? 27. A manufacturer of prefabricated homes has decided to subcontract four components of the homes. Several companies are interested in receiving this business, but none can handle more than one subcontract. The bids made by the companies for the various subcontracts are summarized in the following table. er ber ads and wing table su ber of new ost per Ad $1,000 $900 Bids by Companies (in $1,000s)…arrow_forwardCombined-cycle power plants use two combustion turbines to produce electricity. Heat from the first turbine’s exhaust is captured to heat waterand produce steam sent to a second steam turbine that generates additional electricity. A 968-megawatt combined-cycle gas fired plant can be purchased for $450 million, has no salvage value, and produces a net cash flow(revenues less expenses) of $50 million per year over its expected 30-year life. Solve, a. If the hurdle rate (MARR) is 12% per year, how profitable an investment is this power plant? b. What is the simple payback period for the plant? Is this investment acceptable?arrow_forwardplease don't use an online calculator.. they confuse me.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,