Mbuni Co. Ltd intends to invest in setting up a sugar factory in Maseno area of...
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Mbuni Co. Ltd intends to invest in setting up a sugar factory in Maseno area of Kisumu County. The company has three capacity choices to make; either to install a large factory, medium factory based on the projected outcome in any economic states of nature. From the available information the state of nature has three conditions i.e. strong, stable and weak state of nature. The following details are a summary of performance in each state of nature Investment Choice Profits earned per each state Strong Stable Economy Economy Large Factory Medium Factory Small Factory 400,000 180,000 80,000 0.2, strong 0.5, stable 0.3 Weak. Required: 100,000 240,000 60,000 Weak Economy The probability distributions for strong, stable and weak economic conditions are as given below; a) Choice of alternative investment under i) Maximax criterion ii) Maximin criterion iii) Minimax criterion iv) Expected value for perfect information (EVPI) (4 marks) (60,000) (15,000) 40,000 (2 marks) (2 marks) (2 marks) Mbuni Co. Ltd intends to invest in setting up a sugar factory in Maseno area of Kisumu County. The company has three capacity choices to make; either to install a large factory, medium factory based on the projected outcome in any economic states of nature. From the available information the state of nature has three conditions i.e. strong, stable and weak state of nature. The following details are a summary of performance in each state of nature Investment Choice Profits earned per each state Strong Stable Economy Economy Large Factory Medium Factory Small Factory 400,000 180,000 80,000 0.2, strong 0.5, stable 0.3 Weak. Required: 100,000 240,000 60,000 Weak Economy The probability distributions for strong, stable and weak economic conditions are as given below; a) Choice of alternative investment under i) Maximax criterion ii) Maximin criterion iii) Minimax criterion iv) Expected value for perfect information (EVPI) (4 marks) (60,000) (15,000) 40,000 (2 marks) (2 marks) (2 marks)
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The detailed answer for the above question is provided below ai Maximax Criterion Under the Maximax ... View the full answer
Related Book For
Fundamentals of human resource management
ISBN: 978-0073530468
4th edition
Authors: Raymond A. Noe, John R. Hollenbeck, Barry Gerhart, Patrick M
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