The owner of the Humber Lakeshore Transport Company must decide among manufacturing 10 new transport trucks,...

  
 

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The owner of the Humber Lakeshore Transport Company must decide among manufacturing 10 new transport trucks, manufacturing 20,000 new electric scooters, or leasing all their manufacturing equipment to another company. The profit that will result from each alternative will be determined by whether material costs remain stable, increase moderately, or increase significantly. The specialists calculated the likelihood for each possible level of material costs. In the payoff table below the estimated profit/losses are given in Sthousands. Material Costs Moderate Significant Stable Increase Increase Transport 820 950 1000 Decision Scooters 2300 550 -2400 Leasing 1850 1000 -150 Probability of State of 0.4 0.5 0.1 Nature (a) Construct Opportunity Loss (Regret) Table. Material Costs Stable Moderate Increase Significant Increase Transport Decision Scooters Leasing Probability of State 0.4 0.5 0.1 of Nature (b) Compute the expected opportunity loss value for each decision. EOL(Transport) = EOL(Scooters) = EOL(Leasing) = (c) Select the best decision using EOL criterion. O Decision: Leasing O Decision: Transport Decision: Scooters (d) Which of the following formulae is correct? O EVPI = max EMV O EVPI = min EMV O EVPI = max EOL O EVPI = min EOL %3D The owner of the Humber Lakeshore Transport Company must decide among manufacturing 10 new transport trucks, manufacturing 20,000 new electric scooters, or leasing all their manufacturing equipment to another company. The profit that will result from each alternative will be determined by whether material costs remain stable, increase moderately, or increase significantly. The specialists calculated the likelihood for each possible level of material costs. In the payoff table below the estimated profit/losses are given in Sthousands. Material Costs Moderate Significant Stable Increase Increase Transport 820 950 1000 Decision Scooters 2300 550 -2400 Leasing 1850 1000 -150 Probability of State of 0.4 0.5 0.1 Nature (a) Construct Opportunity Loss (Regret) Table. Material Costs Stable Moderate Increase Significant Increase Transport Decision Scooters Leasing Probability of State 0.4 0.5 0.1 of Nature (b) Compute the expected opportunity loss value for each decision. EOL(Transport) = EOL(Scooters) = EOL(Leasing) = (c) Select the best decision using EOL criterion. O Decision: Leasing O Decision: Transport Decision: Scooters (d) Which of the following formulae is correct? O EVPI = max EMV O EVPI = min EMV O EVPI = max EOL O EVPI = min EOL %3D

Answer rating: 100% (QA)

Answer In the given decision making problem there are 3 alternatives named as Transport Scooters and ... View the full answer