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Decision_Analysis_In-class

# Decision_Analysis_In-class - is \$1200/month with a...

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Decision Analysis Problems Prof Uday 1. A hospital purchases blood every 21 days from a blood bank at \$30/pint. Any blood not used must be discarded after 21 days. If the hospital runs out of blood during the 21-day period, it makes an emergency purchase of blood at a cost of \$50/pint. Demand for blood over the 21-day period is as follows: Demand (pints) 100 125 150 175 200 Probability 0.1 0.2 0.3 0.3 0.1 a. Set up the decision table. b. Find the best decision. 2. Hitech Systems needs to open a branch office in Santa Rosa. Two suites are available, one satisfactory for their current needs, and a larger one capable of satisfying any increase in the demand for their services. The cost of the larger office
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Unformatted text preview: is \$1200/month with a three-year lease. The smaller office is available at \$800/month for three years, but its lease offers an option to move to a larger suite after one and a half years. The cost of the larger suite would then be \$1400/month. Expected revenues are: Small office, current demand: \$1000/month Small office, higher demand: \$1100/month Large office, current demand: \$1000/month Large office, higher demand: \$1600/month The probability of having the current demand for the three years is estimated to be 0.3, while the probability of having the higher demand is 0.7. a. Construct a decision tree. b. Find the best decision(s)....
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