3203 PRODUCTION&OPERATIONS; MGMT-SUMMER II 2018-ONLINE kayla bailey1 7/25/18 10:

Question

3203 PRODUCTION&OPERATIONS; MGMT-SUMMER II 2018-ONLINE kayla bailey1 7/25/18 10:34 PM reate Quiz: Module 2 B (Module A Quiz) QUIZ Time Remaining: 01:18:55 Submit Quiz This Question: 10 pts 4 of 13 (0 complete) This Quiz: 70 pts possible Given the following conditional value table States of Nature Very Favorable Market $350,000 $180,000 110,000 s0 Market $240,000 $90,000 60,000 $0 Unfavorable Market -$300,000 -$20,000 $10.000 sO Build new plant Overtime Do a)Using the decision making under uncertainty with the crtenon of Max max The appropriate decision will be The value of the return under this decision is s b) Using the decision making under uncertainty with the oriterion of Maximin The appropriate decision will be The value of the return under this decision is c) Using the decision making under uncertainty with the criterion of Equally Likely The appropriate decision will be The value of the return under this decision is $ (enter your answer as a whole number) ITE Enter your answer in each of the answer boxes

Explanation / Answer

a) Maximax = Determine the best possible payoff, and choose the alternative with that payoff.

Build new porject = 350,000

Subcontract = 180,000

Overtime = 110,000

Do nothing = 0

So, Build new project with return of 350,000

b) Maximin = —Determine the worst possible payoff for each alternative, and choose the
alternative that has the “best worst.”

Build new porject = -300,000

Subcontract = -20,000

Overtime = -10,000

Do nothing = 0

Ans: Do Nothing, Return 0

c) Equally likely = Determine the average payoff for each alternative, and choose the alternative
with the best average

Build new porject = (350,000 + 240,000 -300,000)/3 = 96,667

Subcontract = (180,000 + 90,000 - 20,000)/3 = 83,333

Overtime = (110,000 + 60,000 - 10,000)/3 = 53,333

Do nothing = 0

So, Build new Project. Value of return = 96667

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