A firm is weighing three capacity alternatives: small, medium, and large job shop. Whatever capacity choice is made, the market for the firm’s product can be “moderate” or “strong.” The probability of moderate acceptance is estimated to be 40%; strong acceptance has a probability of 60%. The payoffs are as follows. Small job shop, moderate market = $24,000; Small job shop, strong market = $54,000. Medium job shop, moderate market = $20,000; medium job shop, strong market = $64,000.Large job shop, moderate market = -$2,000; large job shop, strong market = $96,000. Which capacity choice should the firm make A firm is weighing three capacity alternatives: small, medium, and large job shop.Whatever capacity choice is made, the market for the firm's product can be “moderate"or "strong." The probability of moderate acceptance is estimated to be 40%; strongacceptance has a probability of 60%. The payoffs are as follows. Small job shop,moderate market = $24,000; Small job shop, strong market = $54,000. Medium job shop,moderate market = $20,000; medium job shop, strong market = $64,000.Large job shop,moderate market = -$2,000; large job shop, strong market = $96,000. Which capacitychoice should the firm make?

Decision making is the process of choosing best alternative from a given list using the probability…

Answered: Which capacity choice should the firm…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Related questions

Question

A firm is weighing three capacity alternatives: small, medium, and large job shop. Whatever capacity choice is made, the market for the firm’s product can be “moderate” or “strong.” The probability of moderate acceptance is estimated to be 40%; strong acceptance has a probability of 60%. The payoffs are as follows. Small job shop, moderate market = $24,000; Small job shop, strong market = $54,000. Medium job shop, moderate market = $20,000; medium job shop, strong market = $64,000.Large job shop, moderate market = -$2,000; large job shop, strong market = $96,000. Which capacity choice should the firm make