DEVRY BSOP 209 Week 6 Homework Assignment

1
DEVRY BSOP 209 Week 6 Homework Assignment

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• A.2
• Even though independent gasoline stations have
  been having a difficult time, Susan Helms has
  been thinking about starting her own independent
  gasoline station. Susans problem is to decide
  how large her station should be. The annual
  returns will depend on both the size of her
  station and a number of marketing factors related
  to the oil industry and demand for gasoline.
  After a careful analysis, Susan developed the
  following table
• Size of First Station
• Good Market ()
• Fair Market ()
• Poor Market ()
• For example, if Susan constructs a small station
  and the market is good, she will realize a profit
  of 50,000.

2

• For example, if Susan constructs a small station
  and the market is good, she will realize a profit
  of 50,000.

Size of First Station Good Market () Fair Market () Poor Market ()
Small 50000 20000 -10000
Medium 80000 30000 -20000
Large 100000 30000 -40000
Very Large 300000 25000 -160000
3

• ) Develop a decision tree. Assume each outcome is
  equally likely, then find the highest EMV.
• A.3
• Clay Whybark, a soft-drink vendor at Hard Rock
  Cafes annual Rockfest, created a table of
  conditional values for the various alternatives
  (stocking decision) and states of nature (size of
  crowd)
•  
• States of Nature ( demand)
• Alternatives
• Big
• Average
• Small
• Large Stock
• 22000
• 12000
• - 2000
• Average Stock
• 14000
• 10000
• 6000
• Small Stock
• 9000