A plant manager considers the operational cost per hour of five machine alternatives. The cost per hour is sensitive to three potential weather conditions: cold, mild, and warm. The following table represents the operations cost per hour for each alternative-state of nature combination:

Assume that for a randomly selected day, there is a 30% probability of cold weather, 50% probability of mild weather, and 20% probability of warm weather.

a) An optimistic decision maker would choose which alternative?

b) An pessimistic decision maker would choose which alternative?

c) An equally likely decision maker would choose which alternative?

d) Using expected monetary value which alternative would be chosen?

Answer rating: 100% (QA)

Probability 30 50 20 Alternatives Cold Costday Mild Costday Warm Costday Cost Hour Machine 1 50 40 ... View the full answer