E Chapter 16, Problem 9PE Chapter 2 Chapter 3 Chapter 4 Chapter 6 Chapter 7 chap
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E Chapter 16, Problem 9PE Chapter 2 Chapter 3 Chapter 4 Chapter 6 Chapter 7 chapter 9 v Chapter 11 Problem For the DoorCo Corporation decision n Proble ppo30that the probabilities of the three scenarios are estimated to be 0.15, 0.40, and 0.45, respectively. Find the best expected value decision Problem The DoorCo Corporation is a leading manufactu of garage doors All doors are manufactured in their plant inCarm ndiana and shipped to distrbuton onnters or major customers. DoorCo recently acquired another manufacturer of garage doors. Waconsin Door. and is nsidering moving its wood-dooroperations to the Wi sin plant. Key siderations in this decision are thB transportation, labor, and production costs Btthe two plants Complicating matters is the fact that marketing is predicting a decine in the demand lor wood doors. The company developed thre Demand falls sightly, with noticeable effect on production. 2. Demand and production dedine 20%. 3. Demand and production dedine 40%. The following table show8 the total coats under each decision and acenario. Sight Decine 20% Decine 40% Decline Move to Wisconsin S $915,000 S800,000 What decision 3hould DoorCo make using each strategy? a aggressive strategy conservative strategy c opportunity Hoss strategy Step-by-step solution There is no solution to this problem yet. Get help roma Chegg subject expert ASK AN EXPERT Bookmark Show all steps: O ONExplanation / Answer
a. Aggressive strategy: The strategy with minimum of the smallest possible payoffs for each decision. It is also called minimin payoff strategy, Determine the lowest decline each type and choose the minimum. of that values
After finding the minimum find the minimum of those two minimum values that is 840,000. Therefor using agressive strategy the value to be choosen is 840,000, Decision is Stay in carmel.
b) Conservative strategy: Choose the strategy with minimum of the largest possible payoffs for each decision, also called as minimax. Determine the highest value for eahc type and then choose the minimum.
After finding the maximum find the minimum of those two maximum values that is 1,200,000. Therefor using conservative strategy the value to be choosen is 1,200,000, Decision is Move to Wisconsin.
c.Opportunity-loss strategy: Choose the strategy with the minimum opportunity- loss its payoff – best payoff for that outcome, it is also called as Minimax regret strategy. First compute the opportunity loss
Step 1: Find the minimum of each column
Step 2: Subtract the minimum column value from each value.
Step 3: Determine the maximum opportunity loss (maximum row value) and choose the minimum
From Maximum opportunity loss choose the minimum value that is 40,000, and best strategy is Move to Wisconsin
Slight Decline 20% Decline 40% Decline Minimum Stayin Carmel 1,000,000 900,000 840,000 840,000 Move to Wisconsin 1,200,000 915,000 800,000 800,000Related Questions
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