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Southland Corporation's decision to produce a new line of recreational products has resulted in the need to choose one of two automated manufacturing systems based on proposals from two vendors, A and B. The economics of this decision depends on the market reaction to the new product line. The possible long-run demand has been defined as low, medium, or high. Based on detailed financial analyses of system costs as a function of volume and sales under each demand scenario, the following payoff table gives the projected profits in millions of dollars. a. Determine the best decisions using the maximax, maximin, and opportunity loss decision criteria. Using the maximax criterion, choose -Select- Using the maximin criterion, choose -Select- million. Decision Vendor A Vendor B million. Low $70 $160 Long-Run Demand Medium $150 $150 To minimize the maximum opportunity loss, choose -Select- b. Assume that the best estimate of the probability of low long-run demand is 0.15, of medium long-run demand is 0.10, and of high long-run demand is 0.75. What is the best decision using the expected value criterion? Round your answers to two decimal places. The expected payoff for Vendor A is $ The expected payoff for Vendor B is $ Choose -Select- High $500 $150

Southland Corporation's decision to produce a new line of recreational products has resulted in the need to choose one of two automated manufacturing systems based on proposals from two vendors, A and B. The economics of this decision depends on the market reaction to the new product line. The possible long-run demand has been defined as low, medium, or high. Based on detailed financial analyses of system costs as a function of volume and sales under each demand scenario, the following payoff table gives the projected profits in millions of dollars. a. Determine the best decisions using the maximax, maximin, and opportunity loss decision criteria. Using the maximax criterion, choose -Select- Using the maximin criterion, choose -Select- million. Decision Vendor A Vendor B million. Low $70 $160 Long-Run Demand Medium $150 $150 To minimize the maximum opportunity loss, choose -Select- b. Assume that the best estimate of the probability of low long-run demand is 0.15, of medium long-run demand is 0.10, and of high long-run demand is 0.75. What is the best decision using the expected value criterion? Round your answers to two decimal places. The expected payoff for Vendor A is $ The expected payoff for Vendor B is $ Choose -Select- High $500 $150

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Southland Corporation's decision to produce a new line of recreational products has resulted in the need to choose one of two automated manufacturing systems based on proposals from two vendors, A and B. The economics of this decision depends on the market reaction to the new product line. The possible long-run demand has been defined as low, medium, or high. Based on detailed financial analyses of system costs as a function of volume and sales under each demand scenario, the following payoff table gives the projected profits in millions of dollars. million. Decision Vendor A Vendor B million. Low $70 $160 Long-Run Demand Medium $150 $150 a. Determine the best decisions using the maximax, maximin, and opportunity loss decision criteria. Using the maximax criterion, choose -Select- Using the maximin criterion, choose -Select- To minimize the maximum opportunity loss, choose -Select- b. Assume that the best estimate of the probability of low long-run demand is 0.15, of medium long-run demand is 0.10, and of high long-run demand is 0.75. What is the best decision using the expected value criterion? Round your answers to two decimal places. The expected payoff for Vendor A is $ The expected payoff for Vendor B is $ Choose -Select- High $500 $150
Transcribed Image Text:Southland Corporation's decision to produce a new line of recreational products has resulted in the need to choose one of two automated manufacturing systems based on proposals from two vendors, A and B. The economics of this decision depends on the market reaction to the new product line. The possible long-run demand has been defined as low, medium, or high. Based on detailed financial analyses of system costs as a function of volume and sales under each demand scenario, the following payoff table gives the projected profits in millions of dollars. million. Decision Vendor A Vendor B million. Low $70 $160 Long-Run Demand Medium $150 $150 a. Determine the best decisions using the maximax, maximin, and opportunity loss decision criteria. Using the maximax criterion, choose -Select- Using the maximin criterion, choose -Select- To minimize the maximum opportunity loss, choose -Select- b. Assume that the best estimate of the probability of low long-run demand is 0.15, of medium long-run demand is 0.10, and of high long-run demand is 0.75. What is the best decision using the expected value criterion? Round your answers to two decimal places. The expected payoff for Vendor A is $ The expected payoff for Vendor B is $ Choose -Select- High $500 $150
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