Archives: Solution Manual

1 2 3 4 17 18 19 20 21 22 23 24 25 Probabilities Number of Units Probability Cumulative Probability 0 0.2000 0.2000 1 0.1600 0.3600 2 0.1280 0.4880 3 0.1024 0.5904 4 0.0819 0.6723 5 0.0655 0.7379 14 15 […]

1 2 3 4 5 17 18 19 20 Probabilities Number of Units Probability Cumulative Probability 0 0.2500 0.2500 This system is now 4 independent M/M/1 queues with arrival rate = 12/4 = 3 per hour. Answers above are per […]

1 2 3 4 5 14 15 16 17 18 19 20 21 22 23 24 25 26 Probabilities Number of Units Probability Cumulative Probability 0 0.0377 0.0377 1 0.1132 0.1509 2 0.1698 0.3208 3 0.1698 0.4906 4 0.1274 0.6179 […]

1 2 3 4 5 6 7 8 17 18 20 00.2500 0.2500 22 20.1406 0.5781 24 40.0791 0.7627 26 60.0445 0.8665 28 80.0250 0.9249 33 34 35 36 37 38 39 40 13 0.0059 0.9822 14 0.0045 0.9866 15 […]

1 2 3 4 5 14 15 16 17 18 19 20 21 22 23 24 25 26 Probabilities Number of Units Probability Cumulative Probability 0 0.1429 0.1429 1 0.1224 0.2653 2 0.1050 0.3703 3 0.0900 0.4602 4 0.0771 0.5373 […]

1 2 3 4 5 6 7 8 9 15 16 17 18 31 32 33 34 35 36 37 38 39 11 0.0039 0.9923 12 0.0026 0.9949 13 0.0017 0.9966 14 0.0011 0.9977 15 0.0008 0.9985 16 0.0005 0.9990 […]

1 2 3 4 5 14 15 16 17 18 19 20 21 22 23 24 25 26 Probabilities Number of Units Probability Cumulative Probability 0 0.4286 0.4286 1 0.2449 0.6735 2 0.1399 0.8134 3 0.0800 0.8934 4 0.0457 0.9391 […]

1 2 3 4 17 18 19 20 21 22 23 24 25 Probabilities Number of Units Probability Cumulative Probability 0 0.2000 0.2000 1 0.1600 0.3600 2 0.1280 0.4880 3 0.1024 0.5904 4 0.0819 0.6723 5 0.0655 0.7379 14 15 […]

1 2 3 4 5 14 15 16 17 18 19 20 21 22 23 24 25 26 Probabilities Number of Units Probability Cumulative Probability 0 0.6250 0.6250 1 0.2344 0.8594 2 0.0879 0.9473 3 0.0330 0.9802 4 0.0124 0.9926 […]

1 2 3 4 5 14 15 16 17 18 19 20 21 22 23 24 25 26 Probabilities Number of Units Probability Cumulative Probability 0 0.1667 0.1667 1 0.1389 0.3056 2 0.1157 0.4213 3 0.0965 0.5177 4 0.0804 0.5981 […]

Problem 9-10 1 2 3 4 Number of customers 300 300 300 300 Cost per waiting hour $13 $13 $13 $13 Number of checkout clerks Checkout clerk hourly salary $10 $10 $10 $10 Average waiting time per customer (minutes) 10 […]

1. Arrivals are FIFO. 3. Arrivals are independent. 5. Service times are independent. 2. Average time spent in the system (W) 4. Average time in the queue (Wq) 6. Percent idle time (Po) 9-4. If the service rate is not […]

1 2 3 4 17 18 19 20 21 22 23 24 25 Probabilities Number of Units Probability Cumulative Probability 0 0.0016 0.0016 1 0.0095 0.0111 2 0.0285 0.0395 3 0.0569 0.0964 4 0.0854 0.1818 5 0.1024 0.2842 14 15 […]

current service times, even though a UPC reader is going to be installed. This means that our waiting times are an upper bound for the new, better system (the M/M/s model). We begin with a rough analysis (one that is […]

1 2 3 4 17 18 19 20 21 22 23 24 25 Probabilities Number of Units Probability Cumulative Probability 0 0.1000 0.1000 1 0.0900 0.1900 2 0.0810 0.2710 3 0.0729 0.3439 4 0.0656 0.4095 5 0.0590 0.4686 14 15 […]

1 2 3 4 5 6 7 8 9 15 16 17 18 20 00.1765 0.1765 22 20.1729 0.5965 24 40.0847 0.8023 25 26 50.0593 0.8616 60.0415 0.9031 28 80.0203 0.9525 33 34 35 36 37 38 39 40 13 […]

0.59 Good market (a) Conduct survey $60,000 If favorable, build large shop Large shop $60,000 $60,000 If unfavorable, don’t build any shop 0.90 Good market $55,000 Large shop $60,000 $55,000 $0 $45,000 0.10 2Bad market $25,000 -$45,000 -$40,000 -$45,000 0.90 […]

Risk avoiders. -$45,000 -$40,000 -$5,000 $0 $95,000 $100,000 Monetary value Dollar Utility -$45,000 0.00 -$40,000 0.10 -$5,000 0.70 $100,000 1.00 Problem 8-27 (a) 0.60 Utility 0.20 0.00 0.40 0.80 1.00 Utility Curve $0 0.90 $95,000 0.99 0.82 High demand 0.55 […]

0.82 High demand (a) Construct clinic; EMV = $30,000 $95,000 (b) Conduct study. Construct clinic if positive result Construct $100,000 $95,000 Do not construct clinic if negative result. EMV = $36,140 $0 $69,800 0.18 (c) EVSI = $11,140 0.55 Low […]

TIME Alternatives None Mild Severe EMV Choice Broad 10 21 30 18.40 Worst outcome 10 20 20 Expected Value WITH Perfect Information (EVwPI) = 16.00 Expected Value OF Perfect Information (EVPI) = 0.60 Best Expected Time (EMV) = 16.60 REGRET […]

PAYOFFS Alternatives Good Fair Poor Maximum Choice Minimum Choice Average Choice Realism Choice Small $70,000 $28,000 -$14,000 $70,000 -$14,000 Best $28,000 $53,200 REGRET Alternatives Good Fair Poor Max regret Choice Small $350,000 $14,000 $0 $350,000 Medium $308,000 $0 $14,000 $308,000 […]

Selling price $30.00 PAYOFFS Alternatives 50 100 150 200 EMV Choice 50 $500 $500 $500 $500 $500 100 -$300 $1,000 $1,000 $1,000 $740 Best 150 -$1,100 $200 $1,500 $1,500 $525 200 -$1,900 -$600 $700 $2,000 -$15 Probability 0.20 0.35 0.25 […]

PAYOFFS Alternatives 50 100 150 200 Maximum Choice Minimum Choice Average Choice Realism Choice 50 $500 $500 $500 $500 $500 $500 Best $500 $500 100 -$300 $1,000 $1,000 $1,000 $1,000 -$300 $675 Best $610 150 -$1,100 $200 $1,500 $1,500 $1,500 […]

Selling price $90.00 PAYOFFS Alternatives 6 7 8 9 EMV Choice 7$155 $245 $245 $245 $236 Best 8$100 $190 $280 $280 $217 9$45 $135 $225 $315 $171 Probability 0.10 0.50 0.30 0.10 6$210 $210 $210 $210 $210 Best outcome $210 […]

PAYOFFS Alternatives 100 300 500 EMV Choice 300 -$125 $375 $375 $175 Best 500 -$375 $125 $625 $50 Probability 0.40 0.35 0.25 Best outcome $125 $375 $625 100 $125 $125 $125 $125 Best Expected Monetary Value (EMV) = $175 Expected […]

Selling price $2.50 a = 0.45 REGRET Alternatives 100 300 500 Maximum Choice 100 $0 $250 $500 $500 300 $250 $0 $250 $250 Best 500 $500 $250 $0 $500 (e) Minimax Problem 8-19 Demand Variable cost $1.25 PAYOFFS Alternatives 100 […]

PAYOFFS Alternatives Grow Same Average Choice Realism Choice Large wing $225,000 -$125,000 $50,000 Best $120,000 Best (c) Hurwicz Problem 8-18 (b) Equally Likely Outcomes Small wing $90,000 -$65,000 $12,500 $43,500 No wing $0 $0 $0 $0 a = 0.7

PAYOFFS Alternatives Strong Average Weak EMV Choice Stocks 12% 6% -10% 0.00% Best Expected Monetary Value (EMV) = 3.25% Expected Value OF Perfect Information (EVPI) = 2.15% Expected Value WITH Perfect Information (EVwPI) = 5.40% REGRET Alternatives Strong Average Weak […]

PAYOFFS Alternatives Strong Average Weak Maximum Choice Minimum Choice Average Choice Realism Choice REGRET Alternatives Strong Average Weak Maximum Choice Stocks 0% 0% 12% 12% Bonds 5% 2% 1% 5% Best Money Market 8% 3% 0% 8% (c) Equally Likely […]

PAYOFFS Alternatives Good Average Poor EMV Choice Best outcome $90,000 $41,000 -$4,000 Best Expected Monetary Value (EMV) = $32,550 Expected Value OF Perfect Information (EVPI) = $7,200 Expected Value WITH Perfect Information (EVwPI) = $39,750 REGRET Alternatives Good Average Poor […]

PAYOFFS Alternatives Good Average Poor Maximum Choice Minimum Choice Average Choice Realism Choice Expand $76,000 $30,000 -$17,000 $76,000 -$17,000 $29,667 $20,200 Best REGRET Alternatives Good Average Poor Maximum Choice Expand $14,000 $11,000 $21,000 $21,000 Best Move $0 $0 $32,000 $32,000 […]

PAYOFFS Alternatives Fav market Unfav market Maximum Choice Minimum Choice EMV Choice Acme $400,000 -$175,000 $400,000 Best -$175,000 $262,000 Best Problem 8-13 Outcomes (a) Maximax (b) Maximin (c) EMV Standard $280,000 -$90,000 $280,000 -$90,000 $191,200 High Pro $95,000 -$15,000 $95,000 […]

alternatives, (3) identify the possible outcomes, (4) evaluate the consequences, and (5) select an evaluation criterion and make the appropriate decision. The first four steps or procedures are common for all decision-making problems. Step 5, however, depends on the decision-making […]

0.15 0.25 Sales 130,000 $10,000 $260,000 $10,000 0.4 Sales 140,000 $30,000 Machine 1 $280,000 $30,000 (Semi-Automated) -$250,000 $21,450 Overtime 0.15 $38,000 Sales 150,000 $288,000 $38,000 1 $0 $38,000 Modify $35,000 $285,000 $35,000 Overtime 0.05 $46,000 Sales 160,000 $296,000 $46,000 2 […]

Cost per case (with overtime) = $1.50 + $1.75 + $0.90 = $4.15. Cost of machine = $350,000. Cost to modify machine = $20,000. Volume Profit (Excluding Cost of Machine) 120,000 ($6 – $3.25) × 120,000 = $330,000 130,000 ($6 […]

PAYOFFS Alternatives Fav Mkt Unfav Mkt Max payoff Choice Min payoff Choice Do nothing $0 $0 $0.00 $0 Best a = 0.11 REGRET Alternatives Fav Mkt Unfav Mkt Max regret Choice Do nothing $210,000 $0 $210,000.00 Corp bonds $184,727 $10,000 […]

CHAPTER 8 DECISION ANALYSIS Internet Case Study: Starting Right This is an example of decision making under uncertainty. There are two outcomes: a favorable market and an unfavorable market (event 2). There are four alternatives: do nothing, invest in corporate […]

CHAPTER 8 DECISION ANALYSIS Internet Case Study: Ruth Jones’ Heart By-Pass Operation Expected survival rate with surgery = 0  0.05 + 1  0.45 + 5  0.20 + 10  0.13 + 15  0.08 + 20  […]

0.8 0.6 Comp 12-months Moderate $100,000 $0 $95,000 $300,000 $100,000 0.3 Low 0.9 $50,000 Success (Continue) $250,000 $50,000 -$100,000 $154,000 0.1 Substantial $600,000 $800,000 $600,000 0.2 0.6 No comp 12-months Moderate 12-months normal $400,000 $0 $390,000 $600,000 $400,000 -$100,000 $128,600 […]

CHAPTER 8 DECISION ANALYSIS Internet Case Study: Drink At Home, Inc. See file Ch08 Internet Case Drink At Home.XLS for the TreePlan solution. This is a fairly elaborate decision tree since we have to consider the possibility that competition may […]

PAYOFFS Alternatives Poor Average Good Excellent EMV Choice PP -$5,000 -$2,000 $2,000 $5,000 $700 LB and PP -$10,000 -$4,000 $6,000 $12,000 $2,600 Best Outcomes Case: Ski Right TR and PP -$15,000 -$10,000 $7,000 $13,000 $900 CC and PP -$30,000 -$20,000 […]

0.7 Succ venture 0.50 Unsucc venture Fav survey -$600,000 1 $0 -$600,000 $0 $800,000 No product -$100,000 $0 -$100,000 Hire MAI 0.4 -$100,000 $500,000 Succ venture $1,400,000 Introduce product $2,000,000 $1,400,000 -$500,000 $200,000 0.6 0.50 Unsucc venture Unfav survey -$600,000 […]

Expressway -30 -30.0 2 0.5 -27.5 Congested -40 Broad street -40 -40 0 -27.5 0.5 Not congested -15 -15 -15 Use Broad street. Expected travel time = 27.5 minutes. Problem 8-50 (a) -30 Expressway 0.7 0.70 1 0.5 0.70 Congested […]

Conditional probabilities Prior probabilities P(Growth prediction | Actual growth) = 0.75 P(Actual growth) = 0.30 P(Growth prediction | Actual steady) = 0.18 P(Actual steady) = 0.45 Posterior probabilities GIVEN growth prediction Conditional prob Prior Joint Posterior Outcome P(Growth pred | […]

Conditional probabilities Prior probabilities P(Fav survey | Fav market) = 0.875 P(Fav mkt) = 0.550 Posterior probabilities GIVEN favorable survey Conditional prob Prior Joint Posterior Outcome P(Fav survey | Outcome) prob prob prob Fav market 0.875 0.550 0.481 0.855 Unfav […]

Conditional probabilities Prior probabilities P(Favorable survey | Success) = 0.75 P(Sucess) = 0.50 P(Unfavorable survey | Success) = 0.25 P(Failure) = 0.50 Problem 8-47 P(Favorable survey | Failure) = 0.35 P(Unfavorable survey | Failure) = 0.65 Posterior probabilities GIVEN favorable […]

Conditional probabilities Prior probabilities P(Low survey | Low demand) = 0.70 P(Low demand) = 0.15 P(Fair survey | Low demand) = 0.20 P(Fair demand) = 0.40 P(High survey | Low demand) = 0.10 P(High demand) = 0.45 Fair demand 0.40 […]

Build 1.00 0.62 0.40 Failure No info 0.05 1 0.05 0.62 Not build 0.20 0.20 0.90 Success 0.40 Build 0.40 1 0.62 0.36 0.10 0.60 Failure Fav info 0.00 1 0.00 0.36 Not build 0.10 0.10 Get info 0.20 0.26 […]

(a) Get info. If favorable, build. 0.6 If unfavorable, don’t build. Success Expected return = $29,200. $100 0.9 Success $80 Build $100 $80 2 $29.20 $0 62 0.1 0.6 Failure Favorable -$100 1 -$80 -$100 $0 $62 Not build -$20 […]

Lock-in now 0.150 Lock-in 1 month increases after one month, lock-in then. If rate is unchanged or decreases 0.100 0.100 and accept current rate at settlement. Expected utility = 0.300 0.500 Increase 0.5% Increase 0.5% 0.261. 1 0.000 0.100 0.000 […]