Solutions Chapter 2

Solutions Chapter 2 - Solutions 2.1. a. Some objectives...

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13 Solutions 2.1. a. Some objectives might be to minimize cost, maximize safety, maximize comfort, maximize reliability, maximize cargo capacity (for shopping), maximize maneuverability (in city traffic). Students will undoubtedly come up with others as well. b. In this new context, appropriate objectives might be minimize travel time, maximize exercise, minimize total transportation cost, minimize use of fossil fuels, maximize ease (suitably defined) of visiting friends and shopping. New alternatives to consider include using a bicycle or public transportation, walking, rollerblading, skateboarding, motor scooter, renting a car only when necessary. One might even consider moving in order to live in a more convenient location. 2.2. Future options can affect the eventual value of the consequence. For example, a university faculty member, when accepting a position at a different institution, may not immediately resign his or her position at the first university. Instead, a leave of absence may be taken. The leave of absence provides the opportunity to decide in the future whether to stay at the new institution or return to the old one. A faculty member would most likely think about the two different situations — resigning the current position immediately versus taking a leave and postponing a permanent decision — in very different ways. Another good example is purchasing a house. For many people in our mobile society, it is important to think about the potential for selling the house in the future. Many purchasers might buy an unusual house that suits them fine. However, if the house is too unusual, would-be purchasers might be afraid that, if they decide to sell the house in the near future , it may be difficult to find a buyer and the sales price might be lower than it would be for a more conventional house. Finally, the current choice might eliminate a future valuable option. For example, our policy of powering cars with fossil fuels reduces our options for using oil for potentially more valuable and less destructive future activities. 2.3. In the first case, the planning horizon may be tied directly to the solution of the specific problem at hand. If the problem is an isolated one not expected to repeat, this is a reasonable horizon. If more similar problems are anticipated, the planning horizon might change to look forward in time far enough to anticipate future such situations. If the firm is considering hiring a permanent employee or training existing
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This note was uploaded on 12/04/2011 for the course BUSINESS 500 taught by Professor John during the Spring '11 term at Kansas.

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Solutions Chapter 2 - Solutions 2.1. a. Some objectives...

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