Myrtle Air Express decided to offer direct service from Cleveland to Myrtle Beac

Question

Myrtle Air Express decided to offer direct service from Cleveland to Myrtle Beach. Management must decide between a full-price service using the company's new fleet of jet aircraft and a discount service using smaller capacity commuter planes. It is clear that the best choice depends on the market reaction to the service Myrtle Air offers. Management developed estimates of the contribution to profit for each type of service based upon two possible levels of demand for service to Myrtle Beach: strong and weak. The following table shows the estimated quarterly profits (In thousands of dollars): what is the decision to be made, what is the chance event, and what is the consequence for this problem? The Input in the box below will not be graded, but may be reviewed and considered by your instructor. How many decision alternatives are there? Number of decision alternatives = How many outcomes are there for the chance event? Number of outcomes =

Explanation / Answer

(a) From the table we can see that Full-Price Service and Discount Service are the two possible decision alternatives. Therefore, number of possible decision alternatives = 2

For chance event, there are two demand services, Hight and Low. Therefore, the number of outcomes = 2.

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