Solution-Consider the following decision matrix presenting

Consider the following decision matrix presenting net

Reference no: EM13575481

Consider the following decision matrix presenting net profit/loss estimates regarding an investment project:

		*DEMAND*
		LOW	MEDIUM	HIGH
*EQUIPMENT USED*	Small	300	400	500
	Medium	100	600	600
	Large	- 300	300	900

1. Considering that the probabilities applicable to demand are not known, show the decision recommendations from the points of view of perfect optimism; perfect pessimism; optimism at a = .8; conservatism (equal likelihood); and minimization regrets. Do you see a pattern? If so, which equipment would you choose? Explain.

2. Consider now that the probabilities for demand being low, medium and high have been calculated as .2, .35, and .45, respectively. By using a decision tree, find the expected value, the standard deviation, and the coefficient of variation foe each size of equipment. Which size of equipment would you recommend on the basis of the three coefficients of variation that you calculated?

3. Referring to the Z-Table, calculate the probability that each alternative (each different equipment) will turn out at least a $100 profit? What is the likelihood that each alternative will produce a profit of at least $ 300?

Reference no: EM13575481

Questions Cloud

At the beginning of the current fiscal year the balance : at the beginning of the current fiscal year the balance sheet for davis co. showed liabilities of 320000. during the

Francis incs stock has a required rate of return of 1025 : francis inc.s stock has a required rate of return of 10.25 and it sells for 57.50 per share. the dividend is expected

Spring corp has two divisions daffodil and tulip daffodil : pring corp. has two divisions daffodil and tulip. daffodil produces a gadget that tulip could use in its production.

Under its executive stock option plan w corporation granted : under its executive stock option plan w corporation granted options on january 1 2011 that permit executives to

Consider the following decision matrix presenting net : consider the following decision matrix presenting net profitloss estimates regarding an investment

Discuss the concept of lifestyle and how it may change over : 1. discuss the concept of lifestyle and how it may change over time.2. discuss strategies for paying for college

Two sets of ratios are shown in the schedule of funding : two sets of ratios are shown in the schedule of funding progress prepared for pension truest funds a the funded ratio

At the beginning of the year the net assets of carby co : at the beginning of the year the net assets of carby co. were 346800. the only transactions affecting owners equity

On january 1 2011 parent corporation acquired a controlling : on january 1 2011 parent corporation acquired a controlling interest in the voting common stock of foxboro co. at the

User Account

All Pages

Consider the following decision matrix presenting net

Reference no: EM13575481

Reference no: EM13575481

Questions Cloud

Reviews

Write a Review

Other Subject Questions & Answers

Characteristics associated with agile

What is pollutant what is pollution what are the kinds of

Technological transformation-the knowledge revolution

Is opinion protected by the first amendment

What role management should play in workplace psychology

Communicating with patients

Parties can form a contract without putting terms in writing

Corporate governance issues

Different clients would be considered for inclusion

Calculate the rock yield

Health care evolution table

Art and music to architecture

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT