ework: Assignment: Module A of 1 pt em A.1 the following conditional value table
ID: 390357 • Letter: E
Question
ework: Assignment: Module A of 1 pt em A.1 the following conditional value table: 1 of 3 (0 complete)> Alternatives Build new plant Subcontract Overtime Do Nothing Very Favorable Market $300,000 $160,000 $120,000 $O States of Nature Average Market $210,000 $100,000 $70,000 So Unfavorabl Market $280,000 -$15,000 -$8,000 SO Using the decision making under uncertainty with the criterion of Maximax The appropriate decision will be Build new plant The value of the return under this decision is $ Enter your answer in the answer box and then click Check Answer 4 remaining . Clear All 2Explanation / Answer
Solution:
In the Maximax decision-making criterion, the maximum value among the maximum states of nature of each alternative is chosen as the return. The appropriate decision and the value of the decision under this decision is calculated as below:
Build new plant = Max. ($300,000 , $210,000 , -$280,000) = $300,000
Subcontract = Max. ($160,000 , $100,000 , -$15,000) = $160,000
Overtime = Max. ($120,000 , $70,000 , -$8,000) = $120,000
Do Nothing = Max. ($0 , $0 , $0) = $0
Finding the maximum of maximum value,
Maximax = Max. ($300,000 , $160,000 , $120,000 , $0)
Maximax = $300,000
The appropriate decision will be Build new plant.
The value of the return under this decision is $300,000.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.