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##### Saint GBA334 week 2 quiz

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Question;Quiz 1;Question 1.;1.;A plant manager is considering buying additional stamping;machines to accommodate increasing demand. The alternatives are to buy 1;machine, 2 machines, or 3 machines. The profits realized under each;alternative are a function of whether their bid for a recent defense;contract is accepted or not. The payoff table below illustrates the;profits realized (in $000's) based on the different scenarios faced by;the manager.Alternative Bid Accepted Bid Rejected;Buy 1 machine $10 $5;Buy 2 machines $30 $4;Buy 3 machines $40 $2;Using the information above, which alternative should be chosen based on the criterion of realism with alpha = 0.8?;(Points: 3);Buy 1 machineBuy 2 machinesBuy 3 machines;Question 2.;2.;Consider the following payoff table that;represents the profits earned for each alternative (A, B, and C) under;the states of nature S1, S2, and S3. S1 S2 S3;A $60 $145 $120;B $75 $125 $110;C $95 $85 $130 Using the maximin criterion, what would be the highest expected payoff?;(Points: 3);$145$125$85$75$60;Question 3.;3.;A bakery must decide how many pies to prepare for the;upcoming weekend. The bakery has the option to make 50, 100, or 150;pies. Assume that demand for the pies can be 50, 100, or 150. Each pie;costs $5 to make and sells for $7. Unsold pies are donated to a nearby;charity center. Assume that there is no opportunity cost for lost sales.;Refer to the information above. Assume that the bakery has obtained the;following probability information regarding demand for the pies: P(50) =;0.3, P(100) = 0.5, and P(150) = 0.2.;Which alternative should be chosen using the expected monetary value (EMV) criterion?;(Points: 3);Make 50 piesMake 100 piesMake 150 pies;Question 4.;4.;Consider the following payoff table that;represents the profits earned for each alternative (A, B, and C) under;the states of nature S1, S2, and S3.S1 S2 S3;A $60 $145 $120;B $75 $125 $110;C $95 $85 $130;Using the Laplace criterion, what would be the highest expected payoff?;(Points: 3);$103.3$108.3$120$125$145;Question 5.;5.;ABC Inc. must make a decision on its current;capacity for next year. Estimated profits (in $000s) based on next;year's demand are shown in the table below. Next Year's Demand;Alternative Low High;Expand $100 $200;Subcontract $50 $120;Do nothing $40 $50 Using the information above, which alternative should be chosen based on the maximax criterion?;(Points: 3);ExpandSubcontractDo nothing;Question 6.;6.;Consider the following payoff table that;represents the profits earned for each alternative (A, B, and C) under;the states of nature S1, S2, and S3.S1 S2 S3;A $60 $145 $120;B $75 $125 $110;C $95 $85 $130;Using the criterion of realism and an alpha value of 0.7, what would be the highest expected payoff?;(Points: 3);$127$119.5$98.5$116$145;Question 7.;7.;A plant manager is considering buying additional stamping;machines to accommodate increasing demand. The alternatives are to buy 1;machine, 2 machines, or 3 machines. The profits realized under each;alternative are a function of whether their bid for a recent defense;contract is accepted or not. The payoff table below illustrates the;profits realized (in $000's) based on the different scenarios faced by;the manager.Alternative Bid Accepted Bid Rejected;Buy 1 machine $10 $5;Buy 2 machines $30 $4;Buy 3 machines $40 $2;Refer to the information above. Assume that based on historical bids;with the defense contractor, the plant manager believes that there is a;65% chance that the bid will be accepted and a 35% chance that the bid;will be rejected.;What is the expected value under perfect information (EVPI)?;(Points: 3);1.051.9517.2527.75;Question 8.;8.;A plant manager is considering buying additional stamping;machines to accommodate increasing demand. The alternatives are to buy 1;machine, 2 machines, or 3 machines. The profits realized under each;alternative are a function of whether their bid for a recent defense;contract is accepted or not. The payoff table below illustrates the;profits realized (in $000's) based on the different scenarios faced by;the manager.Alternative Bid Accepted Bid Rejected;Buy 1 machine $10 $5;Buy 2 machines $30 $4;Buy 3 machines $40 $2;Using the information above, which alternative should be chosen based on the maximin criterion?;(Points: 3);Buy 1 machineBuy 2 machinesBuy 3 machines;Question 9.;9.;The expected monetary value (EMV) approach allows you to incorporate your own attitude toward risk.;(Points: 3);True False;Question 10.;10.;Consider the following payoff table that;represents the profits earned for each alternative (A, B, and C) under;the states of nature S1, S2, and S3. S1 S2 S3;A $60 $145 $120;B $75 $125 $110;C $95 $85 $130 Using the maximax criterion, what would be the highest expected payoff?;(Points: 3);$145$124$120$110$100

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