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Here are the changes to the original problem and the revised conditions for this decision-making problem: With a favorable market, John Thompson thinks a large facility would result in a net profit of $195,000 to his firm. - If the market is unfavorable, the construction of a large facility would result in $185,000 net loss. A small plant would result in a net profit of $110,000 in a favorable market, but a net loss of $25,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. a) Create a decislon table, b) What is your recommendation if you would apply the Maximax criterion (Optimistic)? Follow the guidance from your textbook and create a table. c) What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? Follow the guidance from your textbook and create a table. d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.75. Follow the guidance from your textbook and create a table. e) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? Follow the steps from your textbook and create a table. f) What is your recommendation if you would apply the Minimax Regret criterion. Follow the guidance from your textbook and create 3 tables similar to Tables. g) What is your recommendation if you would apply the Expected Monetary Value, assuming that the probability of a favorable market is 60% and the probability of an unfavorable market is 40%. Follow the guidance from your textbook and create a table similar to Table.

Here are the changes to the original problem and the revised conditions for this decision-making problem: With a favorable market, John Thompson thinks a large facility would result in a net profit of $195,000 to his firm. - If the market is unfavorable, the construction of a large facility would result in $185,000 net loss. A small plant would result in a net profit of $110,000 in a favorable market, but a net loss of $25,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. a) Create a decislon table, b) What is your recommendation if you would apply the Maximax criterion (Optimistic)? Follow the guidance from your textbook and create a table. c) What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? Follow the guidance from your textbook and create a table. d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.75. Follow the guidance from your textbook and create a table. e) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? Follow the steps from your textbook and create a table. f) What is your recommendation if you would apply the Minimax Regret criterion. Follow the guidance from your textbook and create 3 tables similar to Tables. g) What is your recommendation if you would apply the Expected Monetary Value, assuming that the probability of a favorable market is 60% and the probability of an unfavorable market is 40%. Follow the guidance from your textbook and create a table similar to Table.

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 46P
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3 II | Here are the changes to the original problem and the revised conditions for this decision-making problem: With a favorable market, John Thompson thinks a large facility would result in a net profit of $195,000 to his firm. If the market is unfavorable, the construction of a large facility would result in $185,000 net loss. A small plant would result in a net profit of $110,000 in a favorable market, but a net loss of $25,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. a) Create a decision table, b) What is your recommendation if you would apply the Maximax criterion (Optimistic)? Follow the guidance from your textbook and create a table. c) What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? Follow the guidance from your textbook and create a table. d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.75. Follow the guidance from your textbook and create a table. e) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? Follow the steps from your textbook and create a table. f) What is your recommendation if you would apply the Minimax Regret criterion. Follow the guidance from your textbook and create 3 tables similar to Tables. g) What is your recommendation if you would apply the Expected Monetary Value, assuming that the probability of a favorable market is 60% and the probability of an unfavorable market is 40%. Follow the guidance from your textbook and create a table similar to Table
Transcribed Image Text:3 II | Here are the changes to the original problem and the revised conditions for this decision-making problem: With a favorable market, John Thompson thinks a large facility would result in a net profit of $195,000 to his firm. If the market is unfavorable, the construction of a large facility would result in $185,000 net loss. A small plant would result in a net profit of $110,000 in a favorable market, but a net loss of $25,000 would occur if the market was unfavorable. Doing nothing would result in $0 profit in either market conditions. a) Create a decision table, b) What is your recommendation if you would apply the Maximax criterion (Optimistic)? Follow the guidance from your textbook and create a table. c) What is your recommendation if you would apply the Maximin Criterion (Pessimistic)? Follow the guidance from your textbook and create a table. d) What is your recommendation if you would apply the Criterion of Realism (Hurwicz Criterion) with a coefficient of realism a = 0.75. Follow the guidance from your textbook and create a table. e) What is your recommendation if you would apply the Equally Likely criterion (Laplace)? Follow the steps from your textbook and create a table. f) What is your recommendation if you would apply the Minimax Regret criterion. Follow the guidance from your textbook and create 3 tables similar to Tables. g) What is your recommendation if you would apply the Expected Monetary Value, assuming that the probability of a favorable market is 60% and the probability of an unfavorable market is 40%. Follow the guidance from your textbook and create a table similar to Table
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