Decision Analysis Without SI - 4

The next 4 questions refer to the following situation:

In the provided blank, insert the letter that corresponds to the correct answer. For example, if the correct answer is "a) 1.990 ", insert only "a" as the correct answer.

Tatum Corporations decision to produce a new line of sport products resulted in the need to construct either a small factory or a large factory. Profits, in thounsands, critically depends on how the marketplace reacts to the new product line. The administration has decided to view the possible long-run demand as low, medium, and high with the following probabilities P(Low) = 0.20, P(Medium) = 0.40, and P(High) = 0.40

Di \ Ej	Demand is	Demand is	Demand is
Factory Size	Low	Medium	High
Small	-100	150	200
Large	50	140	350

I. Compute the maximum expected monetary value. The letter associated with the correct answer is

a) 206

b) 218

c) 250

d) 290

e) None of the above

II. What is the best payoff value if the long-run demand is low? The letter associated with the correct answer is

a) 50

b) 100

c) 150

d) 200

e) None of the above

III. Compute the regret associated with a large factory and a medium demand. The letter associated with the correct answer is

a) 10

b) 50

c) 100

d) 150

e) None of the above

IV. Compute the minimum expected opportunity loss value. The letter associated with the correct answer is

a) 0

b) 4

c) 10

d) 20

e) None of the above