1. A wood manufacturer must decide whether to merge with a larger company to make more investments. If they merge and it is a good sales year, there will be a $910,000 profit; if they merge and it is a poor sales year, there will be a deficit of $ 330,000. If they do not merge and it is a good sales year there will be a $525,000 profit; if they do not merge and it is a poor sales year there will be a $97,000 profit. If the probability of a good sales year is 0.26 and the probability of a poor sales year is 0.76, would merging with the larger company maximize the expected profit?

1. A manufacturer produces two models of racing bike, B and C, each of which must be processed through two machine shops. Machine shop 1 is available for 120 hours per month and machine shop 2 for 180 hours per month. The manufacture of each bike of type B takes six hours in shop 1 and three hours in shop 2. The corresponding times for C are 4 and 10 hours, respectively. If the profit is $180 and $220 per bike of type B and C, respectively, how should the manufacturer arrange production to maximise total profit?

3. 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 Restaurant Theater S 8,000 2,000 6,000 S15,000 8,000 6,000 $20,000 6,000 5,000 Determine the best investment, using the following decision criteria. a. Maximax b. Maximin c. Minimax regret d. Hurwicz(a = .4) e. Equal likelihood %3D 4. A television network is attempting to decide during the summer which of the following three football games to televise on the Saturday following Thanksgiving Day: Alabama yersus Auburn, Georgia versUs Georgia Tech or Army versus

Frijo-Lane Food Products own farms in the Southwest and Midwest, where it grows and harvest potatoes. It then ships these potatoes to three processing plants in Atlanta, Baton Rouge, and Chicago, where different varieties of products, including chips, are produced. Recently, the company has experienced a growth in its product demand, so it wants to buy one or more new farms to produce more potato products. The company is considering six new farms with the following annual fixed costs and projected harvest:     Farm Fixed Annual Costs ($1,000s) Projected Annual Harvest (thousands of tons) 1 $405 11.2 2 390 10.5 3 450 12.8 4 368 9.3 5 520 10.8 6 465 9.6   The company currently has the following additional available production capacity (tons) at its three plants, which it wants to utilize:     Plant Available Capacity (thousands of tons) A 12 B 10 C 14   The shipping costs ($) per ton from the farms…