Question
firm has to decide which one of the three locations is the best to open a...
firm has to decide which one of the three locations is the best to open a new branch. The profitability of each location is affected by the economic conditions and the economic conditions may go up, remain stable or go down with different probabilities. The decision problem faced by the firm is presented in the form of a payoff table as shown below:
|
States |
of |
Nature |
||
|
Up (0.5) |
Stable (0.3) |
Down (0.2) |
||
|
Decision Alternatives |
s 1 |
s 2 |
s 3 |
|
|
Location A |
d 1 |
$100,000 |
$30,000 |
$0 |
|
Location B |
d 2 |
$80,000 |
$55,000 |
$25,000 |
|
Location C |
d 3 |
$55,000 |
$55,000 |
$55,000 |
What is the appropriate decision if a maximax approach is
used?
| A. |
Choose either location A or location C |
|
| B. |
Choose either location B or location C |
|
| C. |
Choose location C |
|
| D. |
Choose location A |
|
| E. |
Choose location B |
Homework Answers
Answer #1
Location A is the recommended option to open a new branch under maximax approach. Pls. refer the calculations below.
-----------------------------------------
DEAR STUDENT,
IF YOU HAVE ANY QUERY ASK ME IN THE COMMENT BOX,I AM HERE TO HELPS YOU.PLEASE GIVE ME POSITIVE RATINGS
*****************THANK YOU***************
Not the answer you're looking for?
Similar Questions
A firm has to decide which one of the three locations is the best to open...
A firm has to decide which one of the three locations is the
best to open a new branch. The profitability of each location is
affected by the economic conditions and the economic conditions may
go up, remain stable or go down with different probabilities. The
decision problem faced by the firm is presented in the form of a
payoff table as shown below:
States
of
Nature
Up (0.5)
Stable (0.3)
Down (0.2)
Decision Alternatives
s 1
s 2
s...
A firm has to decide which one of the three locations is the best to open...
A firm has to decide which one of the three locations is the
best to open a new branch. The profitability of each location is
affected by the economic conditions and the economic conditions may
go up, remain stable or go down with different probabilities. The
decision problem faced by the firm is presented in the form of a
payoff table as shown below:
States
of
Nature
Up (0.5)
Stable (0.3)
Down (0.2)
Decision Alternatives
s 1
s 2
s...
29. A firm has to decide which one of three new products to launch. The profitability...
29.
A firm has to decide
which one of three new products to launch. The profitability of
each product depends on the level of demand. The research conducted
by the firm suggests that the demand for these types of products
can be high, medium, and low with different probabilities. The
decision problem faced by the firm is presented in the form of a
payoff matrix (profits) as shown below:
States of Nature
High
Medium
Low
Decision Alternatives
s1
s2
s3...
Multiple Choice Questions. Select the correct answer.... Of the following, which one would not be considered...
Multiple Choice Questions. Select the correct answer....
Of the following, which one would not be considered a state of
nature?
The gross national product
The status of legislation that could ban one of the firm’s
products
The weather
The price of the firm’s product
A decision maker knows the possible states of nature that could
occur, but does not know their exact probabilities. He is in the
situation known as:
Risk
Uncertainty
Ignorance
Confidence
A small successful firm selects an...
A location analysis has been narrowed down to three locations. The critical factors, their weights, and...
A location analysis has been narrowed down to three locations.
The critical factors, their weights, and the ratings for each
location are shown below:
Location
Factor
Wt.
A
B
C
Labor Cost
.4
70
80
90
Transportation Cost
.2
80
80
60
Market Access
.2
90
70
60
Raw Materials Cost
.1
50
70
90
Utility Cost
.1
80
90
70
If the selection criterion is to be the greatest composite score,
management should choose:
location A.
location B.
location...
John is planning to carry out projects in any of the following: Timber (T), Air Conditioners...
John is planning to carry out projects in any of the following:
Timber (T), Air Conditioners (A), Car Sales (C) and Horticulture
(H). Experience has shown that the three states of nature
prevailing are: Poor (P), Stable (S) and Good (G) economic
conditions. The payoff table below shows the most likely returns of
each investment type under each state of nature. The values are
millions of Pula and the probabilities are supplied for each state
of nature. P S G...
Nick has plans to open some pizza restaurants, but he is not sure how many to...
Nick has plans to open some pizza restaurants, but he is not
sure how many to open. He has prepared a payoff table to help
analyze the situation.
State of nature
Alternaives
Good Market
Fair Market
Poor Market
Open 1
380,000.00
70,000.00
-400,000
Open 2
200,000.00
80,000.00
-200,000
Do Nothing
0
0
0
Nick believes there is a 40 percent chance that the market will
be good, a 30 percent chance that it will be fair,...
QUESTION 28 You would like to invest in one of the three available investment plans: money...
QUESTION 28
You would like to invest in one of the three available
investment plans: money market, bonds, or stocks. The payoffs
(profits) of each plan under two possible future economic
conditions, PE (poor economy) and GE (good economy), are shown
below. The probability of the occurrence of PE is 0.2.
PE GE
Money Market 1000 2000
Bonds 3000 2500
Stocks 2000 4500
The expected value of perfect information (EVPI) is
a.
150
b.
200
c.
320
d.
450
e....
Consider a firm that is deciding whether to operate plants only in the United States or...
Consider a firm that is deciding whether to operate plants only
in
the United States or also in either Mexico or Canada or both.
Congress is currently discussing an overseas investment in new
capital (OINC) tax credit for U.S. firms that operate plants
outside the country. If Congress passes OINC in 2008, management
expects to do well if it is operating plants in Mexico and Canada.
If OINC does not pass in 2008 and the firm does operate plants in...
1.A company has two locations where it employs workers doing the same job and working the...
1.A company has two locations where it employs workers doing the
same job and working the same hours. Other things the same most
workers would prefer to live in location A, but location A has a
higher cost of living than location B.
a.
The company likely needs to pay workers in location A more.
2.
The government is proposing switching from a progressive tax
system in which families pay 15% of the first $50,000 earned, 25%
of the next...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 1 minute ago
asked 10 minutes ago
asked 14 minutes ago
asked 16 minutes ago
asked 43 minutes ago
asked 45 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago