Ralph Dodd, a concessionaire for the local ballpark, has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of the crowd). LARGE AVERAGE SMALL PROBABILITY .3 .5 .2 ALTERNATIVE 1 9,000 12,000 -2,000 ALTERNATIVE 2 22,000 6,000 6,000 ALTERNATIVE 3 15,000 12,000 5,000 The probabilities associated with the states of nature are 0.30 for a large crowd, 0.50 for an average crowd, and 0.20 for a small crowd. a) The opportunity cost for choosing Alternative 2 in the presence of a large crowd is: b) The minimum expected opportunity loss is: c) The maximum amount of money that Ralph should be willing to pay for the perfect information is:
Ralph Dodd, a concessionaire for the local ballpark, has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of the crowd). LARGE AVERAGE SMALL PROBABILITY .3 .5 .2 ALTERNATIVE 1 9,000 12,000 -2,000 ALTERNATIVE 2 22,000 6,000 6,000 ALTERNATIVE 3 15,000 12,000 5,000 The probabilities associated with the states of nature are 0.30 for a large crowd, 0.50 for an average crowd, and 0.20 for a small crowd. a) The opportunity cost for choosing Alternative 2 in the presence of a large crowd is: b) The minimum expected opportunity loss is: c) The maximum amount of money that Ralph should be willing to pay for the perfect information is:
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
Related questions
Question
100%
Ralph Dodd, a concessionaire for the local ballpark, has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of the crowd).
| LARGE | AVERAGE | SMALL | |
| PROBABILITY | .3 | .5 | .2 |
| ALTERNATIVE 1 | 9,000 | 12,000 | -2,000 |
| ALTERNATIVE 2 | 22,000 | 6,000 | 6,000 |
| ALTERNATIVE 3 | 15,000 | 12,000 | 5,000 |
The probabilities associated with the states of nature are 0.30 for a large crowd, 0.50 for an average crowd, and 0.20 for a small crowd.
a) The opportunity cost for choosing Alternative 2 in the presence of a large crowd is:
b) The minimum expected opportunity loss is:
c) The maximum amount of money that Ralph should be willing to pay for the perfect information is:
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Operations Management
Operations Management
ISBN:
9781259667473
Author:
William J Stevenson
Publisher:
McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi…
Operations Management
ISBN:
9781259666100
Author:
F. Robert Jacobs, Richard B Chase
Publisher:
McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Production and Operations Analysis, Seventh Editi…
Operations Management
ISBN:
9781478623069
Author:
Steven Nahmias, Tava Lennon Olsen
Publisher:
Waveland Press, Inc.