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Quantitative Methods Phoenix University Online Chapter 4 Problems 1, 2, 4, 13, 18

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1a. S 1 250 d 1 2 S 2 100 1 S 3 25 S 1 100 d 2 3 S 2 100 S 3 100 b. Decision Maximum Profit Minimum Profit d 1 250 25 d 2 100 75 Optimistic would choose d 1 approach ; the conservative would pick the d 2 approach Regret or opportunity loss table: Decision S 1 S 2 S 3 D 1 0 0 50 D 2 150 0 0 Maximum Regret: 50 d 1 and 150 for d 2 , I would select d 1 2.
a. Optimistic: d1, Conservative d3, Mini-max regret d3 b. I would prefer to use the Conservative approach because its best to understand the issue at hand before actually making a concrete decision. c. Optimistic: d1, Conservative d2, Mini-max regret d2 4 a. Decision: Which lease option to pick Chance event: Miles Driven b. Annual Miles Driven 12,000 15,000 18,000 Forno 10,764 11,160 12,960 Midtown 11,160 11,160 12,960 Hopkins 11,700 11,700 11,700 c. Optimistic: Forno Saab Conservative: Hopkins Automotive d. Midtown Motors e. Most likely: \$11,160; Probability = 0.9 f. Midtown Motors or Hopkins Automotive 13. a. The decision is to choose what type of grapes to plant, the chance event is

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demand for the wine and the consequence is the expected annual profit contribution. There are three decision alternatives (Chardonnay, Riesling and both). There are four chance outcomes: (W,W); (W,S); (S,W); and (S,S). For instance, (W,S) denotes the outcomes corresponding to weak demand for Chardonnay and strong demand for Riesling. b.
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