You are part of a business simulation project where you are tasked with analysing the feasibility of opening a new restaurant in Durban North. Considering this, discuss how a sensitivity analysis can be applied and utilised when assessing the financial feasibility of opening a new restaurant. In addition, describe the key variables that should be incorporated into the sensitivity analysis model to make informed business decisions.
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You are part of a business simulation project where you are tasked with analysing the feasibility of opening a new restaurant
in Durban North. Considering this, discuss how a sensitivity analysis can be applied and utilised when assessing the
financial feasibility of opening a new restaurant. In addition, describe the key variables that should be incorporated into the
sensitivity analysis model to make informed business decisions.
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- Explain the difference between transportation systems evaluation and transportation project evaluation? In transportation project evaluation, quantitative and qualitative methods are typically used. Explain why it is necessary to use the two categories of methods? Explain why life-cycle cost analysis is required for transportation project evaluation? What is a life-cycle cost profile in one service lifespan and in perpetuity, respectively? Explain the differences among certainty, risk, and uncertainty cases of an input factor (such as agency cost, traffic forecast, and discount rate) for evaluation of a transportation project. Explain the interdependent impacts of jointly implementing multiple transportation projects.The following payoff table shows the profit for a decision problem with two states of nature and two decision alternatives. Decision Alternative State of Nature $1 d₁ d₂ (a) Suppose P(s₁) = 0.2 and P(5₂) = 0.8. What is the best decision using the expected value approach? The best decision is --?-- with an expected value of 12 $₂ 6 3 5 (b) Perform sensitivity analysis on the payoffs for decision alternative d₂. Assume the probabilities are as given in part (a), and find the range of payoffs under states of natures, and so that will keep the solution found in part (a) optimal. As long as the payoff for s₁ under d₁ is --?-- , then the solution found in part (a) will be optimal. then the solution found in part (a) will be optimal. As long as the payoff for s₂ under d₁ is --?-- Is the solution more sensitive to the payoff under state of nature s₁ or 5₂? O $₁ 0 5₂Devise a solution for the problem under each of the four criteria of decisions under uncertainty.
- Explain qualitative forecasting methods that managers can use to predict future behavior in various aspects of a company's operations. Use the following guide: Conclusion Answer the following question: Are qualitative forecasts better predictors of outcomes than quantitative methods?Why yes or why not? Justify your answer.what is the strength of analyst forecast information for business decision making?Mickey Lawson is considering investing some money that he inherited. The following payoff table gives the profit that would be realized during the next year for each of three investments alternatives Mickey is considering: State of Nature Decision alternatives Good Economy Poor Economy Stock market 80,000 -20,000 Bonds 30,000 20,000 CDs 23,000 23,000 Probability 0.5 0.5 Compute decision would maximize expected profits. Compute the maximum amount that should be paid for a perfect forecast of the economy.
- Use the following information to answer multiple-choice Questions 21 to 30. A fibre glass company is considering the possibility of introducing a new product. Because of the expense involved in developing the initial moulds and acquiring the necessary equipment to produce fibreglass, it has decided to conduct a pilot study to make sure that the market will be adequate. They estimate that the pilot study will cost £12,000. Furthermore, the pilot study can be either successful or unsuccessful. The basic decisions are to build a large manufacturing facility, a small manufacturing facility, or no facility at all. With a favourable market, the company can expect to make £100,000 from the large facility or £60,000 from the smaller facility. If the market is unfavourable, however, they estimate that they would lose £40,000 with a large facility, while they would lose only £30,000 with the small facility. The company estimates that the probability of a favourable market given a successful…Identify and explain the 5-step decision making process and give an example of a situation where this process can be usedDevelop a decision analysis formulation of this problem by identifying the decision alternatives, state of nature, and the payoff table.
- The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Decision Alternative If S1 d₁ d₂ States of Nature then ? $1 240 90 90 15 The probabilities for the states of nature are P(S₁) = 0.65, P(s₂) = 0.15, and P(s3) = 0.20. (a) What is the optimal decision strategy if perfect information were available? ; If S₂ then ? 90 65 ; If S3 then ? (b) What is the expected value for the decision strategy developed in part (a)? î (c) Using the expected value approach, what is the recommended decision without perfect information? What is its expected value? The recommended decision without perfect information is ? EV = (d) What is the expected value of perfect information? EVPI = îDistinguish between the Expected Monetary Value (EMV) criterion and theExpected Utility Value criterion to decision makingA random sample of 10,000 customers was selected over a six month period. The data provides information on their current status with the bank as well as 12 additional attributes describing their demographic and banking information. what are the key predictors the bank should be aware of with their customers? Examples are included, but not limited to:Are female customers leaving more than males? Is there indication of customer departures associated with specific countries?Is there evidence of salary associated departures? what is an appropiate marketing strategy to attract and retain long term customers