What is the recommended decision without perfect information

Assignment Help Operation Management
Reference no: EM131133536

Meega airlines decided to offer direct service from Akron to Clearwater beach, Florida. Management must decide between full-price service using a company’s new fleet of jet aircraft and a discount-service using smaller capacity commuter planes. Management developed estimates of the contribution to profit for each type of service based upon two possible levels of demand for service on Clearwater beach: high, moderate, and low. The following table shows the estimated quarterly profits (in thousands of dollars): Service Demand for service High Medium Low Full price 900 760 –430 Discount 710 650 350 The probabilities for the demand is P(High) = 0.3, P(Medium) = 0.5, and P(Low) = 0.2, respectively. a. What is the optimal decision strategy if perfect information were available? b. What is the expected value for the decision strategy developed in part a? c. Using the expected value approach, what is the recommended decision without perfect information? What is its expected value? d. What is the expected value of perfect information?

Reference no: EM131133536

Questions Cloud

Build skill in evaluating the interdependent variables : This discussion will help you build skill in evaluating the interdependent variables that impact the value and trajectory of global leadership development programs in terms of their effectiveness in fostering deep self-awareness and growth as well as..
Monsanto engages in poor ethical behavior : Every business wants to earn a profit as we have often discussed. At what point, however, does corporate lobbying mean that that a company like Monsanto engages in poor ethical behavior?
Switching costs and lock in its customers and suppliers : How could a business use information technology to increase switching costs and lock in its customers and suppliers? Use business examples to support your answers.
The dark act or deny americans the right to know act : Consider the bill proposed about GMO labelling by Kansas Representative Mike Pompeo last summer and supported by three St. Louis area Congressmen that would not require companies to disclose whether the product was based on GMO seeds. (See article) M..
What is the recommended decision without perfect information : Meega airlines decided to offer direct service from Akron to Clearwater beach, Florida. Management must decide between full-price service using a company’s new fleet of jet aircraft and a discount-service using smaller capacity commuter planes. Using..
Decide on the size of the shopping mall : A construction company must decide on the size of the shopping mall, i.e. Large, Medium or Small, that has to be constructed in their acquired plot in the sub-urban area of Seattle. Due to the market conditions, the number of visitors to the mall wil..
Effected societal beliefs about different ethnic groups : How has eugenics effected societal beliefs about different ethnic groups? What allowed for the rise of the Third Reich in Germany? In general, discuss one interesting fact you learned this week.
About right to recover the price of the goods : Jack and Jill, 2 merchants, were discussing business over lunch when they agreed on the sale of some goods. Neither of them had any paper, so Jack wrote the following on a napkin: What do you infer about Jack’s right to recover the price of the goods..
Buyer purchased home theater system : Buyer purchased a home theater system for $20,000 from Top Buy, Inc. As part of the written sales contract, Top Buy agreed to install the system for an additional $2,000. After the system was installed and Buyer began using it, the system developed p..

Reviews

Write a Review

Operation Management Questions & Answers

  Describe some key decisions its management

Describe some key decisions its management has faced within the past year or two. Identify an ethical issue the organization either faces or has faced in the past.

  Case study on altex corporation

Read Case: Altex Corporation in the case study section of your text. Write a summary of the case and answer the following questions from the end of the case.

  What are the advantages from an hr perspective

The CEO has just called you, the HR Director, into a meeting. She has just come back from a meeting with other local business owners, and has heard how many of them are now routinely conducting background checks on social media for any candidate. Wha..

  What process types is unilever expert in

What process types is Unilever expert in? What other process types might it also use?

  Discriminatory according to disparate treatment theory

Many companies have dress codes that require men to wear suits and women to wear dresses. Is this discriminatory according to disparate treatment theory.

  Recommendations for person contemplating retirement

Provide four to six recommendations for a person contemplating retirement, knowing that identity and self-worth are tied to one’s work roles. Support your recommendations. Create an intervention for older adults in a retirement residence on “successf..

  About demand and supply in running this business

Suppose you were going to open your own business, what business would you open and how would you use what you learned about demand and supply in running this business?

  Acquisitions to build synergy-create competitive advantage

Looking at the corporate level strategy for Follett Corporation (not the refrigeration company), is there a way they could use Mergers & Acquisitions to build synergy and create competitive advantage?

  Who are the high and low performers in the industry

Who are the high and low performers in the industry? Why? What are the competitive dynamics between and within groups?

  An examination of the overall negative effects technologies

An examination of the overall negative effects of new technologies on the safety and security field

  The transhipment problem

The transhipment problem, the shortest path problem, and the maximal flow problem are three applications in the linear programming problems. Can any of these three applications be applied in the Pharmacy? And how?

  Which of statements below describes IRR decision criterion

Which of the statements below describes the IRR decision criterion?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd