Modern Electronics specializes in manufacturing modern electronic
components. It also builds the equipment
that produces the components. Modern
Electronics is considering building a new facility but the estimated profits
would be impacted by the type of market that develops. The probability for a strong market is 0.1;
for a fair market is 0.3; and for a poor market is 0.6. You are responsible for
advising the president of Modern Electronics on the type facility that should
be built or to not build a facility at all.
The table shows the estimated profits under each market and for each
size facility.
Explanation: You can use QM for Windows->Decision
Analysis->Decision Table with the above information.
Estimated
Profits
Strong
Market
Fair
Market
Poor
Market
Build a large
facility
550,000
150,000
-500,000
Build a medium-size
facility
500,000
125,000
-150,000
Build a small
facility
250,000
75,000
-25,000
Do not build a
facility
0
0
0
1.
What
is your recommendation to the president based on expected value that maximizes
profits (EMV)?
Answer:
Explanation
(include expected monetary value):
Software Output:
2.
Provide
a second recommendation to the president that minimizes regret.
Answer:
Explanation
(include expected monetary value):
Software Output:
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