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Managerial Decision Modeling With Spreadsheets (Answer Key) P2-14-1

This document presents a decision analysis with three alternatives - expand, move, or no change. It lists the potential outcomes (good, average, poor) and associated dollar values for each alternative. It also calculates the maximum choice, minimum choice, average choice, Hurwicz with an alpha of 0.4, and minimax values for each alternative to help evaluate the options. The best alternative based on each calculation is identified.

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Rahim Rajani
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315 views2 pages

Managerial Decision Modeling With Spreadsheets (Answer Key) P2-14-1

This document presents a decision analysis with three alternatives - expand, move, or no change. It lists the potential outcomes (good, average, poor) and associated dollar values for each alternative. It also calculates the maximum choice, minimum choice, average choice, Hurwicz with an alpha of 0.4, and minimax values for each alternative to help evaluate the options. The best alternative based on each calculation is identified.

Uploaded by

Rahim Rajani
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Problem 2-14

PAYOFFS Outcomes (a) Maximax (b) Maximin (c) Equally Likely


Alternatives Good Average Poor Maximum Choice Minimum Choice Average Choice
Expand $76,000 $30,000 -$17,000 $76,000 -$17,000 $29,667
Move $90,000 $41,000 -$28,000 $90,000 Best -$28,000 $34,333 Best
No change $40,000 $15,000 $4,000 $40,000 $4,000 Best $19,667

REGRET Outcomes (e) Minimax


Alternatives Good Average Poor Maximum Choice
Expand $14,000 $11,000 $21,000 $21,000 Best
Move $0 $0 $32,000 $32,000
No change $50,000 $26,000 $0 $50,000
(d) Hurwicz
Realism Choice
$20,200 Best
$19,200
$18,400
a= 0.4

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