wine produced from each grower\'s grapes for each percentage defec- tive is as f
ID: 409433 • Letter: W
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wine produced from each grower's grapes for each percentage defec- tive is as follows. CASE PROBLEMS CASE PROBLEM S1.1 Whither an MBA at Strutledge? competition from other colleges and universities, and the abil- ity of a program to attrect new faculty and students. The follow- table summarizes the possible gains (i.e., revenues Strutledge (see Case Problem 1.3 is a small liberal arts col in payoff t lege faced with rising costs and decreasing enrollments. It less costs) the college might realize with each new program would like to increase revenues (including tuition, donations, under different future success scenarios and grants) by expanding its student base and building ties with businesses in the surrounding area. To do so, it is con- sidering establishing a new graduate program-an MBA, a master's in computer science, a master's in information technol ogy, a master's in nursing (affiliated with a major hospital in a Graduate Program Unsuccessful Success Successful Succe Program Success Moderate Very $316,000 $57,000 $231,000 $424,000 graduate pro- Computer Science -210,000 35,000 190,000 375,000 -472,000 75,000 305,000 517,000 135,000 81,000 205,000307,000 MBA In addition to generating additional enrolilments within a new MBA program, administrators also believe that a new graduate pro- Computer Science -210,000 gram could increase exposure and visibility for the school and enhance its reputation, as a whole, which could also result in increased enrollments and revenue sources. The cost to estab- lish and maintain each new program differs according to faculty N salaries, facilities, and the support necessary to attract new stu- dents, which, in turn, affects revenues. The degree of success that each new graduate program might achieve is affected byAdminstration75000 55,000 180,000 245,000 Information Technology Nursing program differs according to faculty Health Administration -75,000 55,000 180,000 245,000Explanation / Answer
a. Under the maximax criteria, that course will be selected whose best gain is better than the best gain of all other courses. The best gain for all courses are present under the "very successful" category. The payoffs are: MBA = 424,000. Computer Science = 375,000. IT = 517,000. Nursing = 307,000 and Health administration = 245,000. The maximum payoff is being offered by IT at $517,000 and it should be selected.
b. Mximin: in this case the worst (minimum) is selected and then the best (maximum) of the worst is selected. The minimum payoff for each course: MBA = -316,000. Computer Science = -210,000. IT = -472,000. Nursing = -135,000 and Health administration = -75,000. The best/maximum is health administration with a payoff of -$75,000 and hence it should be selected.
c.Equal likelihood: under this equal weight will be given to each outcome i.e 0.25 to unsuccessful, 0.25 to moderate success, 0.25 to successful and 0.25 to very successful.
MBA: 0.25*(-316000)+(0.25)*(-57000)+0.25*231000+0.25*424000. The calculatins are shown below:
The maximum value in weighted values = $114,500 (nursing). Thus nursing will be selected.
d. the maximum payoff is multiplied by alpha and minimum by (1-alpha). alpha = 0.5. a-alpha = 1-0.5 = 0.5
MBA: 424,000*0.5+(-316000*0.5) = 54,000. Computers = -210000*0.5+375,000*0.5 = 82,500. IT = -472000*0.5+517,000*0.5 = 22,500. Nursing = -135000*0.5+307000*0.5 = 86,000. Healt = -75,000*0.5+245,000*0.5 = 85,000.
The maximum is in case of Nursing ($86,000) and it will be selected.
e. It would mean that they are neither fully optimistic nor they are fully pessimistic.
f. under this the weights are multiplied with the payoffs and the sum is obtained. for eg. for mba: 0.32*316000+0.35*(-57000)+0.24*231000+0.09*424000 = -27470
g. Maximum weighted payff is for nursing (126,760) and it will be selected.
h. I would recommend Strutledge to follow the equal likelihood decision criteria as equal weights are given to each situation and so there is a sense of uniformity.
Unsuccessful Moderate success Successful Very successful Weighted values Weight 0.25 0.25 0.25 0.25 MBA -316,000.00 -57,000.00 231,000.00 424,000.00 70,500.00 Computers -210,000.00 -35,000.00 190,000.00 375,000.00 80,000.00 IT -472,000.00 -75,000.00 305,000.00 517,000.00 68,750.00 Nursing -135,000.00 81,000.00 205,000.00 307,000.00 114,500.00 Health -75,000.00 55,000.00 180,000.00 245,000.00 101,250.00Related Questions
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