The concessionaire for Carnegie Hall has developed a table of conditional values
ID: 2406563 • Letter: T
Question
The concessionaire for Carnegie Hall has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd).
Large
Average
Small
Alternative 1
9,000
12,000
-2,000
Alternative 2
22,000
6,000
6,000
Alternative 3
15,000
12,000
5,000
The concessionaire has no idea what sort of crowd might materialize — it has been decades since the Del Aires last performed together, but there has been a resurgence in interest thanks to a re-release of the classic movie Horror of Party Beach.
If the concessionaire is using the Hurwicz criteria with alpha = 0.6, the stocking decision would be [ Select ] ["Alternative 2", "Alternative 3", "Alternative 1"] .
Large
Average
Small
Alternative 1
9,000
12,000
-2,000
Alternative 2
22,000
6,000
6,000
Alternative 3
15,000
12,000
5,000
Explanation / Answer
HURCWICZ CRITERIA LARGE AVERAGE SMALL ALTERNATIVE1 9000 12000 -2000 ALTERNATIVE2 22000 6000 6000 ALTERNATIVE3 15000 12000 5000 ALPHA =0 .6 hurqwicz criteria alpha (best case ) + 1-alpha (worst case) {1-alpha}= 0.4 ALTERNATIVE1 0.6(12000)+0.4(-2000) = 6400 ALTERNATIVE 2 0.6(22000)+0.4(6000) = 15600 ( BEST ALTERNATIVE) ALTERNATIVE 3 0.6(15000)+ 0.4(5000) = 11000 IF concessionaire is using the Hurwicz criteria with alpha = 0.6, the stocking decision would be ALTERNATIVE 2
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