MGM $351$ Operation Management

In class Practice Problem

The construction manager for Acme Construction, Inc. must decide whether to build single family homes, apartments, or condominiums. This is not a product$-$mix problem, but an allor nothing decision. He will hire workers and rent equipment appropriate for one action only. He estimates annual profits $($in thousands of dollars$)$ will vary with population trends as follows:

$\backslash$table$[[$Dwelling type,Population steady,Population grows,Population grows$],[,$$$100,$slowly,rapidly$],[$Apartments$,,170,90],[$Condominiums$,-20,100,220]]$

a$.$ If he uses the maximin criterion, which type of dwellings will he choose to build? Show your supporting calculations.

b$.$ If he uses the equally likely criterion, which kind of dwellings will he choose to build? Show your supporting calculations.

c$.$ If the construction manager were an optimist, what criterion would he choose? What would be the choice of dwelling for that criterion? Show your supporting calculations.