Quiz 2 Applied - ABC Inc must make a decision on its...

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ABC Inc. must make a decision on its current capacity for next year. Estimated profits (in $000s) based on next year's demand are shown in the table below. Next Year's Demand Alternative Low High Expand $100 $200 Subcontract $50 $120 Do nothing $40 $50 Using the information above, which alternative should be chosen based on the Laplace criterion? Student Answer: Expand Subcontract Do nothing
Points Received: 3 of 3 Comments: Question 2 . Question : Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3. S1 S2 S3 A $60 $145 $120 B $75 $125 $110 C $95 $85 $130 Using the minimax regret criterion of realism, which alternative would you choose?
Points Received: 3 of 3 Comments: Question 3 . Question : Consider the following payoff table that represents the profits earned for each alternative (A, B, and C) under the states of nature S1, S2, and S3. S1 S2 S3 A $60 $145 $120 B $75 $125 $110 C $95 $85 $130 What is the expected value of perfect information (EVPI)? Assume P(S1) = 0.5 and P(S2) = 0.25.
Points Received: 3 of 3 Comments:

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