NOTE THE ANSWER NEEDS TO BE DONE IN EXCEL WITH DYNAMIC FORMULA FUNCTIONS. I CAN
ID: 2620458 • Letter: N
Question
NOTE THE ANSWER NEEDS TO BE DONE IN EXCEL WITH DYNAMIC FORMULA FUNCTIONS. I CAN SEND THE EXCEL STARTER IF NEEDED LET ME KNOW
Penny rent a car offers three rental plans as shown in Table 1. Please note that the fixed cost is provided in terms of months. Later, you will be asked to construct a cost table in terms of annual cost. Table 1. Rental plan characteristics
Plan
Fixed Monthly Payment
Additional costs per annual miles
I
$200
$0.095 per mile
II
$300
$0.061 for each of the first 12,000 miles and $0.05 per mile thereafter
III
$150
$0.10 for each of the first 12,000 miles and $0.20 per mile thereafter
A customer is considering which option to take. This customer estimates the likely annual mileage as shown in Table 2.
Table 2. Estimated annual mileage probabilities
Annual Miles
10,000
15,000
20,000
25,000
30,000
Probability
0.1
0.1
0.2
0.3
0.3
Create a cost matrix for this problem using total annual cost. Show all costs as negative values (i.e. accounting format).
1) What alternative is selected using the Maximax criterion?
2) What alternative is selected using the Maximin criterion?
3) What alternative is selected using the Expected Monetary Value criterion?
4) What alternative is selected using the Minimax Regret criterion?
5) What alternative is selected using the Expected Regret (or Expected Opportunity Loss) criterion?
NOTE THE ANSWER NEEDS TO BE DONE IN EXCEL WITH DYNAMIC FORMULA FUNCTIONS. I CAN SEND THE EXCEL STARTER IF NEEDED LET ME KNOW
Penny rent a car offers three rental plans as shown in Table 1. Please note that the fixed cost is provided in terms of months. Later, you will be asked to construct a cost table in terms of annual cost. Table 1. Rental plan characteristics
Plan
Fixed Monthly Payment
Additional costs per annual miles
I
$200
$0.095 per mile
II
$300
$0.061 for each of the first 12,000 miles and $0.05 per mile thereafter
III
$150
$0.10 for each of the first 12,000 miles and $0.20 per mile thereafter
Explanation / Answer
Km Plan I Plan II Plan III
1(a) 30000 5250 5232 6600
1(b) 10000 3350 4210 2800
1© 23000 4585 4882 5200
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