ing Tuide witr Operations and Supply Chain zi Wang | 9/20/18 6:02 PM Quiz: Suppl
ID: 388430 • Letter: I
Question
ing Tuide witr Operations and Supply Chain zi Wang | 9/20/18 6:02 PM Quiz: Supplement A Quiz Submit Quiz This Question: 1 pt dI 1 of 9 (7 complete) This Quiz: 9 pts possible A manager is trying to decide whether to build a small, medium, or large facility Demand can be low average, or high, with the estimated probabilities being 0.40. 0.35, and 0.25, respectively expected to eam an after-tax net present value of just $31.000 if demand is low If demand is average, the small facility is expected to earn $35,000, small facility is expected to earn $50.000 and can be expanded to medium size to earn $80,000 or to large size to earm $165 000 it can be increased to medium size to earn a net present value of $70.000 If demand is high, the medium-sized facility is expected to lose an estimated $50,000 if demand is low and eam $90,000 if demand is average. If demand is high, the medium-sized facility is expected to earn a net present value of $100,000: it can be expanded to a large size for a net payoff of $115,000 If a large facility is built and demand is high, eamings are expected to be $180.000. if demand is average for the large facility the present value is expected to be $80.000 if demand is low, the facility is expected to lose $70.000 Which alternative is best according to each of the following decision criterion? Enter your responses as whole numbers) Decision Criterion a. Maximin b. Maximax c. Minimax regret MaximinSmal aciliy1000an s 180000 thousand S thousand Large facilityExplanation / Answer
Speedboat should be recommended. This is because as can be seen in the given table, speedboat has the highest percentage of low unemployment, and the lowest percentage of high unemployment thus giving an optimistic look to the staff report.
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