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Strayer MAT540 week 2 homework




Question;MAT540;Week 2 Homework;Chapter 12;8. A;local real estate investor in Orlando is considering three alternative;investments: a motel, a restaurant, or a theater. Profits from the motel or;restaurant will be affected by the availability of gasoline and the number of;tourists, profits from the theater will be relatively stable under any;conditions. The following payoff table shows the profit or loss that could;result from each investment;Gasoline Availability;Investment;Shortage;Stable Supply;Surplus;Motel;$-8,000;$15,000;$20,000;Restaurant;2,000;8,000;6,000;Theater;6,000;6,000;5,000;Determine the best investment, using the following decision criteria.;a. Maximax;b. Maximin;c. Minimax regret;d. Hurwicz (? = 0.4);e. Equal likelihood;16. A concessions;manager at the Tech versus A&M football game must decide whether to have;the vendors sell sun visors or umbrellas. There is a 30% chance of rain, a 15%;chance of overcast skies, and a 55% chance of sunshine, according to the;weather forecast in College Junction, where the game is to be held. The manager;estimates that the following profits will result from each decision, given each;set of weather conditions;Weather Conditions;Decision;Rain;Overcast;Sunshine;.30;.15;.55;Sun visors;$-500;$-200;$1,500;Umbrellas;2,000;0;-900;a. Compute the expected value;for each decision and select the best one.;b. Develop the opportunity loss;table and compute the expected opportunity loss for each decision.;24. In;Problem 13 the Place-Plus real estate development firm has hired an economist;to assign a probability to each direction interest rates may take over the next;5 years. The economist has determined that there is a.50 probability that;interest rates will decline, a.40 probability that rates will remain stable, and;a.10 probability that rates will increase.;a.;Using expected value, determine the best project.;b.;Determine the expected value of perfect information.;Reference Problem 13: Place-Plus;a real estate development firm, is considering several alternative development;projects. These include building and;leasing an office park, purchasing a parcel of land and building an office building;to rent, buying and leasing a warehouse, building a strip mall, and building;and selling condominiums. The financial success of these projects depends on;interest rate movement in the next 5 years. The various development projects;and their 5-year financial return (in $1,000,000s) given that interest rates;will decline, remain stable, or increase, are shown in the following payoff;table;Interest Rate;Project;Decline;Stable;Increase;Office park;$0.5;$1.7;$4.5;Office building;1.5;1.9;2.5;Warehouse;1.7;1.4;1.0;Mall;0.7;2.4;3.6;Condominiums;3.2;1.5;0.6;32. The;director of career advising at Orange Community College wants to use decision;analysis to provide information to help students decide which 2-year degree;program they should pursue. The director has set up the following payoff table;for six of the most popular and successful degree programs at OCC that shows;the estimated 5-year gross income ($) from each degree for four future economic;conditions;Economic;Conditions;Degree Program;Recession;Average;Good;Robust;Graphic design;145,000;175,000;220,000;260,000;Nursing;150,000;180,000;205,000;215,000;Real estate;115,000;165,000;220,000;320,000;Medical technology;130,000;180,000;210,000;280,000;Culinary technology;115,000;145,000;235,000;305,000;Computer information;technology;125,000;150,000;190,000;250,000;Determine the best degree program in terms of projected income, using the;following decision criteria;a.;Maximax;b.;Maximin;c.;Equal likelihood;d.;Hurwicz (? = 0.50);36. Construct;a decision tree for the decision situation described in Problem 25 and indicate;the best decision.;Reference Problem;25: Fenton and Farrah Friendly, husband-and-wife;car dealers, are soon going to open a new dealership. They have three offers;from a foreign compact car company, from a U.S. producer of full-sized cars, and;from a truck company. The success of each type of dealership will depend on how;much gasoline is going to be available during the next few years. The profit;from each type of dealership, given the availability of gas, is shown in the;following payoff table;Gasoline Availability;Dealership;Shortage;Surplus;.6;.4;Compact cars;$ 300,000;$150,000;Full-sized cars;-100,000;600,000;Trucks;120,000;170,000;Decision Tree diagram to complete


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