QUESTION 13 Given is a decision payoff table with future demand probabilities. A

Question

QUESTION 13 Given is a decision payoff table with future demand probabilities. Answer all questions below. Future Demand Alternatives Low 17 Moderate 12 High 13 21 15 0.35 edium Facility 12 arge Facility robabilities0.35 0.3 a) The EMV (Expected Monetary Value) for small facility is = | b) The EMV (Expected Monetary Value) for medium facility is- c) The EOL (Expected Opportunity Loss/Regrets) for medium facility is =1 places) d) The EOL (Expected Opportunity Loss/Regrets) for large facility is -1431 (in 2 decimal places) e) The best decision by using EMV is to select the f. The best decision by using EOL is to select the (in 1 decimal place) (in 1 decimal place) (in 2 decimal facility facility Click Save and Submit to save and submit. Click Save All Answers to save all answers

Explanation / Answer

EMV = summation Xi  * Pi

A)For small facility EMV = 17*0.35 + 12*0.3 +13*0.35 = 14.10

B)For medium facility EMV = 12*0.35 + 22*0.3 + 21*0.35 = 18.15

For Large facility EMV = -5*0.35 + 7*0.3 + 15*0.35 = 5.60

To calculate EOL, we need to regret:

Regret = | best payoff - payoff received |

For low demand , best payoff = 17

For medium demand , best payoff = 22

For high demand , best payoff =21

Regret Table

Alternatives Low Moderate High

Small 17-17 =0 22-12=10 21-13=8

Medium 17-12=5 22-22=0 21-21=0

High 17-(-5)=22 22-7=15 21-15=6

EOL= Summation Ri * Pi

C)EOL for medium facility = 5*0.35 + 0*0.3 + 0*0.35 = 1.75

D)EOL for large facility = 22*0.35 + 15*0.3 + 6*0.35 = 14.30

EOL for small facility = 0*0.35 + 10*0.3 + 8*0.35 = 5.80

E)As EMV of medium facility is largest so one should select the medium facility.

F)As EOL of medium facility is lowest so one should should the medium facility as the regret/loss is minimum.

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