1. Below is a table of potential payoffs (profits in thousands of dollars per month) associated...

 

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1. Below is a table of potential payoffs (profits in thousands of dollars per month) associated with three possible storage facility sizes (small, medium, large). Because the facility is being built near a university, the payoffs are expected to depend on the university's enrollment numbers. The decision makers have decided to classify future enrollments as "low" (fewer than 5,000 students), "moderate” (5,001-10,000 students), and "high" (greater than 10,000 students). Small Medium Large Low Moderate High 10 13 12 8 14 15 6 7 18 2. Enrollment advisers and budget analysts at the university estimate the following probabilities of occurrence for each of the enrollment levels: Low 0.2, Moderate 0.2. Using this additional information regarding the scenario in problem #1, determine the expected monetary values of each alternative. Low Moderate High Small 10 13 12 Medium 8 14 15 Large 6 7 18 3. Express the information above in the form of a decision tree. Decision EMV, small: EMV, medium: EMV, large: 000 Demand Level and Likelihood Expected profits 4. Consider only low and high demand. Under what probabilities of high demand would a small facility be best? 1. Below is a table of potential payoffs (profits in thousands of dollars per month) associated with three possible storage facility sizes (small, medium, large). Because the facility is being built near a university, the payoffs are expected to depend on the university's enrollment numbers. The decision makers have decided to classify future enrollments as "low" (fewer than 5,000 students), "moderate” (5,001-10,000 students), and "high" (greater than 10,000 students). Small Medium Large Low Moderate High 10 13 12 8 14 15 6 7 18 2. Enrollment advisers and budget analysts at the university estimate the following probabilities of occurrence for each of the enrollment levels: Low 0.2, Moderate 0.2. Using this additional information regarding the scenario in problem #1, determine the expected monetary values of each alternative. Low Moderate High Small 10 13 12 Medium 8 14 15 Large 6 7 18 3. Express the information above in the form of a decision tree. Decision EMV, small: EMV, medium: EMV, large: 000 Demand Level and Likelihood Expected profits 4. Consider only low and high demand. Under what probabilities of high demand would a small facility be best?

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