helping| vigorous| weak|
Full price| $960| -$490|
discount| $670| $320|
a) The finis to be made here is to choose the type of service to provide. The circumstances event is the level of withdraw for the Myrtle Air service. The progeny is the amount of quarterly profit that the company receives. There argon two decision alternatives ( adequate price and discount service). There are two outcomes for the chance event (strong demand and weak demand).
consequently 2 decision alternatives and 2 outcomes for chance events..!
b)
Opportunity termination or regret table
| High demand| Low demand| Maximum regret|
Full service| 0| 810| 810|
send packing service| 290| 0| 290|
High demand discount service 960-670=$290
Low demand full service=320-(-490)=$810
From the above pay off table by optimistic border on the decision is the full price service
From the pay off tables by conservative approach the decision is discount service..!
And from the above fortune loss or regret table by minimax approach discount service is advised..!(the one with minimum regret)
c) hazard of strong demand=0.7
probability of weak demand=0.3
anticipate value (full sevice)=0.7(960)+(0.3)(-490)=$525 thousands
judge value(discount service)=0.7(670)+0.3(320)=$565 thousand
Now from the expected values the expected value is to a greater extent for discount service
Therefore the optimal decision is Discount service
d) probability of strong demand=0.8
probability of weak demand=0.2
Expected value (full sevice)=0.8(960)+(0.2)(-490)=$670 thousands
Expected value(discount...If you want to get a full essay, order it on our website: Orderessay
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