# Location thus overtime might be necessary at times

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location. Thus. overtime might be necessary at times. The following table gives the totalmonthly cost (in \$1,000s) for each possible location under each demand possibility. Theprobabilities for the demand levels have been determined to be 20% for low demand, 30%for medium demand, and 50% for high demand.DEMAND IS LOWDEMAND ISMEDIUMDEMAND IS HIGHArdmore, OK85110150Sweetwater, TX90100120Lake Charles, LA110120130Demand (‘1000)MAXIMUM IN AROWMINIMUM IN AROWLOWMEDIUMHIGH(Best cost)(Worst cost)Ardmore, OK8511015085150Sweetwater, TX9010012090120Lake Charles,LA110120130110130Probability0.20.30.5a)Which location would be selected based on the optimistic criterion?.
b)Which location would be selected based on the pessimistic criterion?
MGT 780 – (EXERCISE 2) DECISION ANALYSISc)Which location would be selected based on the minimax regret criterion?
d)Which location should be selected to minimize the expected cost of operation?
e)How much is a perfect forecast of the demand worth?
MGT 780 – (EXERCISE 2) DECISION ANALYSIS= 108,000 – (85)0.2 + (100)0.3 + (120)0.5= 108,000 – 107,000=1,000f)Which location would minimize the expected opportunity loss?.

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