6. ADM2302 Assignment#5 Fall2010

6. ADM2302 Assignment#5 Fall2010 - opportunities exceeded...

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ADM2302 Section A, B, C and D Assignment # 5 Assignment # 5 Decision Analysis ADM2302 students are reminded that submitted assignments must be neat, readable, and well-organized. Assignment marks will be adjusted for sloppiness, poor grammar and spelling, as well as for technical errors. While working together is encouraged, plagiarism on assignments will not be accepted. Each student must provide an individual original submission of completed assignments. Solutions to all exercises in this assignment are to include “managerial statements” that communicate the results of the analyses. Chapter 10 : Problem: 10 (a, b, c, and d); Problem 12 (You can draw the decision tree by hand and use hand calculation for the maximum expected profit or you can use Excel to draw the decision tree and calculation (i.e. TreePlan)); Problem 16 (You can draw the decision tree by hand or you can use Excel (i.e. TreePlan)); and A small building contractor has recently experienced two successive years in which work
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Unformatted text preview: opportunities exceeded the firms capacity. The contractor must now make a decision on capacity for next year. Estimated profits (in $ thousands) under each of the two possible states of nature are as shown in the table below. NEXT YEARS DEMAND Alternative Low High Do nothing Expand Subcontract $40* 20 40 $60 80 70 * Profit in $ thousands. Which alternative should be selected if the decision criterion is: a. Maximax? b. Maximin? c. Minimax regret? Suppose after a certain amount of discussion, the contractor is able to subjectively assess the probabilities of low and high demand: P(low) = .3 and P(high) = .7. d. Determine the expected profit of each alternative. Which alternative is best? e. Compute the expected value of perfect information. How could the contractor use this knowledge? Fall 2010 Page 1...
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This note was uploaded on 02/13/2011 for the course ADM 2302 taught by Professor El during the Fall '05 term at University of Ottawa.

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