ASSIGNMENT NO. 11 (Decision Analysis) 2. A manager of a shopping mall is considering three alternative expansion projects for his mall: a small motel, a theater, or a restaurant. The construction...

Assignment No. 11

Answer 2 d, e

Extracted text: ASSIGNMENT NO. 11 (Decision Analysis) 2. A manager of a shopping mall is considering three alternative expansion projects for his mall: a small motel, a theater, or a restaurant. The construction costs are about the same, but the monthly profits can be affecte3d by future economie conditions in the area. The following table shows the monthly net operating revenue that could result from each project. ECONOMY CONDITIONS Project Good Poor Fair Motel $7,000 SI8,000 S15,000 Restaurant 5,000 10,000 Theater 13,000 20,000 10,000 11,000 Determine the best investment using the following decision criteria: a) Maximax b) Maximin e) Minimax Regret d) Hurwicz (a- 0,4) Index of optimism e) Equal likelihood 3. Microchip is planning a new facility and considering a location in the following countries. Depending on the economic conditions for the next 3 years, the following costs have been estimnated (SUS million). ЕCONOMIC CONDITIONS Country Same Decline Improve Korea 21.7 19.3 15.2 China 19.0 18.5 17.6 India 19.2 17.1 14.9 Philippines 16,8 22.5 13.8 Singapore 21.2 25.0 12.5 Which alternative would be selected if: a) The decision maker is an optimist (Minimin)? b) The decision maker is a pessimist (Minimaxy? e) The decision maker has an index of optimism of 0.4? d) The decision maker wants to use the Minimax regret criterion?