Kelly is contemplating on returning to graduate school to earn her MBA. She know

Question

Kelly is contemplating on returning to graduate school to earn her MBA. She knows from experience, that she can get a well paying job after undergraduate school. The probability of getting a job with a salary of $20,000/year is 75% and a job with a salary of $30,000/year is 25%. However, if she chooses to attend and finish graduate school, her salary would likely increase. The probability of getting a job with a salary of $40,000/year is 75% and getting a job with a salary of $50,000/year is 25%. Knowing that tuition cost and years spent on schooling is not a concern to Kelly, should Kelly find a job or return to graduate school?

Find the best decision using the following:

a.         Develop a payoff table for the above situation.

b.         Find the following:

1.         Maximax

2.         Maximin

3.         Equal Likelihood

4.         Minimax Regret

c.         Create a sensitivity graph comparing the different alternatives as the probability of getting a job changes.

Explanation / Answer

A.

B.

Decision: Graduation.

Decision: Graduation.

S P S*P Step Situation Probabillity Expected value Undergrad 20000 0.75 15000 Undergrad 30000 0.25 7500 22500 Grad 40000 0.75 30000 Grad 50000 0.25 12500 42500

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.