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In order to assist the manager, you have been asked to compile a resource which will define the various management terms. Provide an explanation of the following terms, with examples specifically relating to Boutique Catering, to include in a resource file which incorporates a reason why each concept is relevant (or not relevant) to decision-making:
- Criterion of realism
- Equally likely
- Minimax regret
Boutique Catering is considering expanding the business by preparing frozen meals that will be home-delivered. The meals will then only require to be heated up by the customer. As a point of difference, the meals will be cooked according to the CSIRO Total Wellbeing recipe book. The meals Boutique Catering will offer are everyday, vegetarian and specialty meals (for people who have allergies).
After conducting a mail survey of the local area, a probability table of likely sales of frozen meals was created below.
|Number of frozen meals
What is the expected value and variance of the number of frozen meals sold?
Prepare a one-page memo for management analysing the results. In your explanation advise management on the best outcome.
The manager at Boutique Catering has requested a second analysis be conducted as they believe that there is a 50-50 chance the frozen meals will be successful. If the demand for frozen meals is favourable, Boutique Catering could realise a profit of $200,000. If the market is not favourable, they will lose $50,000 or they could do nothing. Construct a decision tree to help analyse the problem.
Boutique Catering is considering purchasing all or a portion of the conference centre next door. The area available in total is 200 square metres with annual returns depending on the size of area that is purchased. An analysis has be developed in the following table:
|Area of conference centre purchased
1. Develop a decision table and identify the following:
1. What is the maximax decision?
2. What it the maximin decision?
3. What it the equally likely decision?
4. What is the minimax decision?
Subject learning outcomes
This assessment task will assess the following learning outcome/s:
• be able to demonstrate problem-solving skills in assessing, organising, summarising and interpreting relevant data for decision making purposes.
• be able to apply probability concepts to decision making.
Graduate learning outcomes
This task also contributes to the assessment of the following CSU Graduate Learning Outcome/s:
• Academic Literacy and Numeracy (Knowledge) - CSU Graduates understand the use and structure of appropriate language in written, oral, visual, mathematical, and multi-modal communication.
• Digital Literacies (Knowledge) - CSU Graduates understand professional, social and cultural implications of the global use of technology.
This task provides a clear working analysis on decision tables and decision trees.The optimistic decision maker is considered as an aggressive decision maker under the uncertainty conditions.Here, the decision maker will select the best action plan which yields the highest profit when compared with all other possible courses of action.