1. Consider an important decision with which you will be faced in the near future. Construct a scoring model detailing your major criteria and assign weights to each. Indicate which data are known for sure and which are uncertain. What can be done to reduce the uncertainty?

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2. The management of Dream Cruises, Ltd., operating in the Caribbean, has established the need for expanding its fleet capacity and is considering what the best plan for the next 8-year planning period will be. One strategy is to buy a larger 40,000-ton cruise ship now, which would be most profitable if demand is high. Another strategy would be to start with a small 15,000-ton ship now and consider buying another medium 25,000-ton ship 3 years later. The planning department has estimated the probabilities for high and low demand for each period to be 0.6 and 0.4 respectively. If the company buys the large ship, then the annual profit after taxes for the next 8 years is estimated to be $800,000 if demand is high and $100,000 if it is low. If the company buys the small ship, then the annual profits each year will be $300,000 if demand is high and $150,000 if it is low. After 3 years with the small vessel, a decision for new capacity will be reviewed. At this time, the firm may decide to expand by adding a 25,000-ton ship or by continuing with the small one. The annual profit after expansion will be $700,000 if demand is high and $120,000 if it is low. Determine the optimal fleet-expansion strategy if projected annual profits are discounted to the rate of 12%.