The concessionaire for Carnegie Hall has developed a table of conditional values
ID: 2406597 • Letter: T
Question
The concessionaire for Carnegie Hall has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd).
Large
Average
Small
Alternative 1
9,000
12,000
-2,000
Alternative 2
22,000
6,000
6,000
Alternative 3
15,000
12,000
5,000
The concessionaire has no idea what sort of crowd might materialize — it has been decades since the Del Aires last performed together, but there has been a resurgence in interest thanks to a re-release of the classic movie Horror of Party Beach.
If the concessionaire is optimistic the stocking decision would be [ Select ] ["Alternative 1", "Alternative 2", "Alternative 3"] .
Large
Average
Small
Alternative 1
9,000
12,000
-2,000
Alternative 2
22,000
6,000
6,000
Alternative 3
15,000
12,000
5,000
Explanation / Answer
OPTIMISTIC APPROACH LARGE AVERAGE SMALL MAXIMUM ALTERNATIVE1 9000 12000 -2000 12000 ALTERNATIVE2 22000 6000 6000 22000 ALTERNATIVE3 15000 12000 5000 15000 NOTE One way to make this decision is the optimistic approach, also called the maximax approach. This involves choosing the option with the largest possible payoff or the smallest possible cost In the above situation the maximum from each states of nature has to be selected. The alternative 2 which has maximum of 22000 shall be selected based on optimistic approach
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