a:
Calculate the EMV value.
a:
Explanation of Solution
The EMV value of a0can be calculated as follows:
The value of EMV of a0 is 0.
The EMV value of a1can be calculated as follows:
The value of EMV of a1 is 3.
The EMV value of a2can be calculated as follows:
The value of EMV of a2 is 4.
The EMV value of a3can be calculated as follows:
The value of EMV of a3 is 3. Since the EMV for a2 is greater, select the a2 (Bake 2 cakes).
b:
Calculate the EOL value.
b:
Explanation of Solution
The EOL value of a0can be calculated as follows:
The value of EOL of a0 is 7.5.
The EOL value of a1can be calculated as follows:
The value of EOL of a1 is 4.5.
The EOL value of a2can be calculated as follows:
The value of EOL of a2 is 3.5.
The EOL value of a3can be calculated as follows:
The value of EMV of a3 is 4.5. Since the EMV for a2 is greater, select the a2 (Bake 2 cakes).
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Chapter 22 Solutions
Statistics for Management and Economics (Book Only)
- Managers of the restaurant, NicePizzeria@Nola, have to plan for the number of pizzas they want to make at the beginning of each day. Based on market research, the managers know the daily demand can only be one of the three levels: 30, 40 or 50 pizzas. Also, the probabilities of getting a daily demand of 30, 40, 50 pizzas are 0.3, 0.4, 0.3 respectively. The managers decide that their tentative daily supply of pizza should also be one of the three levels: 30, 40 or 50 pizzas. Each pizza costs $3 to make and the price is $8 per pizza. Note: The profit for each pizza sold is $5. For the ones supplied but not sold, the profit is -$3. Fill in the following profit table (hint: use two-way table ) and use the profit table to answer the questions. Three demand levels 30 40 50 30 Three supply 40 levels 50 1) What is the maximin supply level? 2) What is the maximum expected profit (across three supply levels)?arrow_forwardFIVE. Which of the following is true about standard deviation? The first step in calculating the standard deviation is calculating the square root. The second step in calculating the standard deviation is to subtract each measurement from the intermediate value and then square that difference. The last step in calculating the standard deviation is to sum the squared values and divide by the number of values minus one. Standard deviation is a type of average where the positive and negative numbers sum to zero. The amount of difference of the measurements from the central value is called the sample standard deviation.arrow_forwardThe time taken to complete a bicycle race is normally distributed, with anaverage time (μ) of 2.25 hours and a standard deviation (σ) of 0.65 hours.What is the probability that a randomly selected cyclist will: Q.7.3.1 Take between 2.75 and 3.15 hours to complete the race? Interpretyour answer. Q.7.3.2 Take between 2.05 and 2.15 hours to complete the race? Interpretyour answer.arrow_forward
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