USE THIS EXCEL FORMAT TO SOLVE THESE QUESTION

A souvenir retailer has an opportunity to establish a new location inside a large airport. The annual returns will depend primarily on the size of the space she rent and if the economy will be favorable. The retailer has worked with the airport concession commission and has projected the following possible annual earnings associated with renting a small medium, large or very large space:

SIZEGOODFAIRPOOR

ECONOMYECONOMYECONOMY

Small$70,000$28,000-$14,000

Medium$112,000$42,000-$28,000

Large$140,000$42,000-$56,000

Very large$420,000$35,000-$221,000

a)What is the souvenir retailer's maximax decision?

b)What is her maximin decision?

c)What is her equally likely decision?

d)What is her criterion of realism decision, using

a=0.8

e)What is her minimax regret decision

w File Edit View History Bookmarks Tools Help X Inbox (6,23 C Get Home C Solve The C Solve The C Solve The C Solve The University Bb Upload Ass MSIS212 P *Homework Course Hol Pearsor X -A https://etext-ise.pearson.com/products/106536/pages/57?locale=&redirectURL=http (150% ... V G >> E Getting Started Bay Net Login Page E Q N A : SCREENSHOT 3-2A Formula View of Excel Layout for Thompson Lumber: Decision Making under Risk This is the best payoff for each outcome, used in calculating IF function is used to identify regret values and EVwPI. the best alternative. B D E F 1 N Thompson Lumber (Dec Making Under Risk) 3 PAYOFFS Maximize EMV 4 Outcomes Alternatives High demand Moderate demand Low demand EMV Choice 5 Large plant 200000 100000 -120000 =SUMPRODUCT (B5:D5,BSB.D58) IF(E5=MAX(ES5:ES7), Best,") 6 Small plant 90000 50000 -20000 -SUMPRODUCT(B6:D6,B58.D58) -IF(E6-MAX(E$5:E$7), "Best,") No plant =SUMPRODUCT(B7:D7.B$8.D58) =IF(E7=MAX(ES5:E57), "Best" Probability 10.3 0.5 02 9 10 Best outcome =MAX(B5:B7) =MAX(C5:C7) =MAX(D5:D7) 11 Best EMV 12 Expected Value WITH Perfect Information (EVwPI) = -SUMPRODUCT(B10:D10,B8:DB) 13 Best Expected Monetary Value (EMV) = MAX(ES:E7) 14 Expected Value OF Perfect Information (EVP))= =F12-F13 15 16 REGRET Outcomes Minimize EOL 17 Alternatives High demand Moderate demand Low demand EOL Choice 18 Large plant =MAX(8$5:857)-85 =MAX(C$5:C$7)-C5 =MAX(D$5:D$7)-D5 =SUMPRODUCT(B18:D18,8521:D$21) =IF(E18=MIN(E513:ES20),"Best",") 19 Small plant =MAX(B$5:8$7)-B6 =MAX(C$5:C$7)-C6 =MAX(D$5:D$7)-D6 =SUMPRODUCT(B19:D19,8521:D$21) =IF(E19-MIN(ES18:ES20), "Best"") 20 No plant -MAX(B$5:8$7)-B7 =MAX(C$5:C$7)-C7 -MAX(D$5:D$7)-D7 -SUMPRODUCT(B20:D20,BS21:D$21) IF(E20-MIN(E518:ES20),"Best 21 Probability 0.3 0.5 0.2 EVPI is the difference between SUMPRODUCT function is used EVwPI and best EMV to commute EMV and FOI values