Question: For the Pittsburgh Development Corporation problem in Section 1 3 . 3 , the decision alternative to build the large condominium complex was found to
For the Pittsburgh Development Corporation problem in Section the decision alternative to build the large condominium complex was found to be optimal using the expected value approach. In Section we conducted a sensitivity analysis for the payoffs associated with this decision alternative. We found that the large complex remained optimal as long as the payoff for the strong demand was greater than or equal to $ million and as long as the payoff for the weak demand was greater than or equal to $ million. There is a probability assessment of that demand will be strong s and a corresponding probability of that demand will be weak s The payoff table is below.
State of Nature
Decision Alternative Strong Demand s Weak Demand s
Small complex, d
Medium complex, d
Large complex, d
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