Operations Management: Sustainability and Supply Chain Management (12th Edition)
12th Edition
ISBN: 9780134130422
Author: Jay Heizer, Barry Render, Chuck Munson
Publisher: PEARSON
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Chapter A, Problem 30P
Question
•••• A.24 On the opening page of Module A and in Example A8, we follow the poker decision made by Paul Phillips against veteran T.J. Cloutier. Create a decision tree that corresponds with the decision made by Phillips.
At the Legends of Poker tournament in Los Angeles, veteran T.J. Cloutier opens with a $60,000 bet. (Antes and required bets of $39,000 are already on the table.) Former Go2net CTO Paul Phillips ponders going “all in”—betting virtually all his chips. Using decision theory, here’s how he decided.
“To see the details of Phillips’s decision, see Example A8.
As on the first page in this module, Paul Phillips is deciding whether to bet all his chips against poker star T.J. Cloutier. Philips holds a pair of 7s. Phillips reasons that T.J. will fold (with 80% probability) if he does not have a pair of 5s or better, or very high cards like a jack, queen, king, or ace. But he also figures that a call would put $853,000 into the pot and surmises that even then, there is 45% chance his pair of 7s will win.
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Question
A local real estate investor in Kingston is considering three investments: a motel, a restaurant, or a theatre. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourist; Profits from the theatre will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment:
Real Estate Investor Payoff Table
Payoffs are Profits
States of Nature (Gasoline Avaliability)
Decision Alternatives
Shortage
Stable Supply
Surplus
Motel
$8,000
$15,000
$22,000
Restaurant
$2,000
$8000
$6,000
Theater
$6,000
$6,000
$5,000
Which option should the real estate investor choose if he uses the Equal Likelihood criterion?
Using a maximax approach, what alternative should the real estate investor choose?
Using the Maximum approach, what alternative should the real estate investor choose?
Question
A local real estate investor in Kingston is considering three investments: a motel, a restaurant, or a theatre. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourist; Profits from the theatre will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment:
Real Estate Investor Payoff Table
Payoffs are Profits
States of Nature (Gasoline Avaliability)
Decision Alternatives
Shortage
Stable Supply
Surplus
Motel
$8,000
$15,000
$22,000
Restaurant
$2,000
$8000
$6,000
Theater
$6,000
$6,000
$5,000
If the probability of a shortage of gasoline is 25%, the probability of a stable supply of gasoline is 45% and the probability of a surplus of gasoline is 30%. Using the EMV, What option should the real estate investor choose and what is that optimal expected value?
What is the most the real…
Question 14
Which of the following is true of decision trees when used to solve a complex problem?
They can be converted into truth tables.
They can be used only when the decision maker is risk neutral.
They provide a useful way to decompose the problem.
None of the choices
They are used to compute a decision maker's risk tolerance.
Chapter A Solutions
Operations Management: Sustainability and Supply Chain Management (12th Edition)
Ch. A - Prob. 1DQCh. A - Prob. 2DQCh. A - Prob. 3DQCh. A - Prob. 4DQCh. A - Prob. 5DQCh. A - Question: 6. Explain how decision trees might be...Ch. A - Prob. 7DQCh. A - Prob. 8DQCh. A - Question 9. Identify the five steps in analyzing a...Ch. A - Prob. 10DQ
Ch. A - Question 11. The expected value criterion is...Ch. A - Question 12. When are decision trees most useful?Ch. A - Given the following conditional value table,...Ch. A - Prob. 2PCh. A - Prob. 3PCh. A - Jeffrey Helm owns a health and fitness center...Ch. A - Prob. 5PCh. A - Prob. 6PCh. A - Prob. 7PCh. A - Prob. 8PCh. A - Prob. 9PCh. A - Prob. 10PCh. A - The University of Miami bookstore stocks textbooks...Ch. A - Palmer Jam Company is a small manufacturer of...Ch. A - Prob. 13PCh. A - Prob. 14PCh. A - Prob. 21PCh. A - Prob. 22PCh. A - Prob. 23PCh. A - Prob. 24PCh. A - Prob. 25PCh. A - Prob. 26PCh. A - Philip Musa can build either a large video rental...Ch. A - Prob. 28PCh. A - Prob. 29PCh. A - Question A.24 On the opening page of Module A and...Ch. A - Question Warehouse Tenting at the Port of Miami...Ch. A - Question Warehouse Tenting at the Port of Miami...Ch. A - Question Warehouse Tenting at the Port of Miami...
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