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Even though independent gasoline stations have been having a difficult time, Ian Langella has been thinking about starting his own independent gasoline station. lan's problem is to decide how large his station should be. The annual returns will depend on both the size of his station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, lan developed the following table: Size of First Station Small Medium Large Very Large For example, if lan constructs a small station and the market is good, he will realize a profit of $40,000. This exercise contains only parts b, c, and d. b) Using the decision making under uncertainty with the criterion of Maximax The appropriate decision will be Good Market $40,000 $90,000 $105,000 $320,000 The value of the return under this decision is $ c) Using the decision making under uncertainty with the criterion of Maximin The appropriate decision will be States of Nature Fair Market The value of the return under this decision is $. d) 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). $18,000 $27,000 $27,500 $26,000 D Poor Market - $8,000 -$22,000 -$36,000 -$180,000

Even though independent gasoline stations have been having a difficult time, Ian Langella has been thinking about starting his own independent gasoline station. lan's problem is to decide how large his station should be. The annual returns will depend on both the size of his station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, lan developed the following table: Size of First Station Small Medium Large Very Large For example, if lan constructs a small station and the market is good, he will realize a profit of $40,000. This exercise contains only parts b, c, and d. b) Using the decision making under uncertainty with the criterion of Maximax The appropriate decision will be Good Market $40,000 $90,000 $105,000 $320,000 The value of the return under this decision is $ c) Using the decision making under uncertainty with the criterion of Maximin The appropriate decision will be States of Nature Fair Market The value of the return under this decision is $. d) 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). $18,000 $27,000 $27,500 $26,000 D Poor Market - $8,000 -$22,000 -$36,000 -$180,000

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section9.2: Elements Of Decision Analysis
Problem 2P
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Even though independent gasoline stations have been having a difficult time, Ian Langella has been thinking about starting his own independent gasoline station. Ian's problem is to decide how large his station should be. The annual returns will depend on both the size of his station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, lan developed the following table: Size of First Station Small Medium The value of the return under this decision is $ c) Using the decision making under uncertainty with the criterion of Maximin The appropriate decision will be Good Market $40,000 $90,000 $105,000 $320,000 Large Very Large For example, if lan constructs a small station and the market is good, he will realize a profit of $40,000. This exercise contains only parts b, c, and d. b) Using the decision making under uncertainty with the criterion of Maximax The appropriate decision will be The value of the return under this decision is $ d) 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 $ States of Nature Fair Market $18,000 $27,000 $27,500 $26,000 (enter your answer as a whole number). Poor Market - $8,000 - $22,000 -$36,000 -$180,000
Transcribed Image Text:Even though independent gasoline stations have been having a difficult time, Ian Langella has been thinking about starting his own independent gasoline station. Ian's problem is to decide how large his station should be. The annual returns will depend on both the size of his station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, lan developed the following table: Size of First Station Small Medium The value of the return under this decision is $ c) Using the decision making under uncertainty with the criterion of Maximin The appropriate decision will be Good Market $40,000 $90,000 $105,000 $320,000 Large Very Large For example, if lan constructs a small station and the market is good, he will realize a profit of $40,000. This exercise contains only parts b, c, and d. b) Using the decision making under uncertainty with the criterion of Maximax The appropriate decision will be The value of the return under this decision is $ d) 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 $ States of Nature Fair Market $18,000 $27,000 $27,500 $26,000 (enter your answer as a whole number). Poor Market - $8,000 - $22,000 -$36,000 -$180,000
ped the following table: The value of the return under this decision is $ Size of First Station Small Medium Large Very Large For example, if lan constructs a small station and the market is good, he will realize a profit of $40,000. This exercise contains only parts b, c, and d. b) Using the decision making under uncertainty with the criterion of Maximax The appropriate decision will be c) Using the decision making under uncertainty with the criterion of Maximin The appropriate decision will be The value of the return under this d) Using the decision making under u The appropriate decision will be The value of the return under this Small Medium Very Large Large Good Market $40,000 $90,000 $105,000 $320,000 erion of Equally Likely States of Nature Fair Market r your answer as a whole number). $18,000 $27,000 $27,500 $26,000 Poor Market - $8,000 - $22,000 -$36,000 -$180,000
Transcribed Image Text:ped the following table: The value of the return under this decision is $ Size of First Station Small Medium Large Very Large For example, if lan constructs a small station and the market is good, he will realize a profit of $40,000. This exercise contains only parts b, c, and d. b) Using the decision making under uncertainty with the criterion of Maximax The appropriate decision will be c) Using the decision making under uncertainty with the criterion of Maximin The appropriate decision will be The value of the return under this d) Using the decision making under u The appropriate decision will be The value of the return under this Small Medium Very Large Large Good Market $40,000 $90,000 $105,000 $320,000 erion of Equally Likely States of Nature Fair Market r your answer as a whole number). $18,000 $27,000 $27,500 $26,000 Poor Market - $8,000 - $22,000 -$36,000 -$180,000
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