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Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Demand Volume Low Decision Basic model Advanced model $90,000 $60,000 Fill in the table below for maximum and minimum profit payoffs under each model. Round your answers to the nearest dollar. Decision alternative Basic model Advanced model $ $ Advanced model Opportunity Loss Matrix Decision alternative Basic model $ Maximum $ Calculate the amounts foregone by not adopting the optimal course of action for each possible demand level. Determine the maximum opportunity cost for each model. Fill in the table below. If your answer is zero, enter "0". Round your answers to the nearest dollar. Low $ $ 0 Minimum $ 30,000 $ Future events Medium 25,000 $ 0 $ Medium $110,000 $135,000 High 35,000 $ + 0 . $ High $155,000 $190,000 Maximum 35,000 Given the uncertainty associated with the demand volume, and no other information to work with, what decision would you make? The aggressive strategy (maximax) is to choose the -Select- The conservative strategy (maximin) is to choose the -Select- The opportunity loss strategy is to choose the -Select- 30,000

Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Demand Volume Low Decision Basic model Advanced model $90,000 $60,000 Fill in the table below for maximum and minimum profit payoffs under each model. Round your answers to the nearest dollar. Decision alternative Basic model Advanced model $ $ Advanced model Opportunity Loss Matrix Decision alternative Basic model $ Maximum $ Calculate the amounts foregone by not adopting the optimal course of action for each possible demand level. Determine the maximum opportunity cost for each model. Fill in the table below. If your answer is zero, enter "0". Round your answers to the nearest dollar. Low $ $ 0 Minimum $ 30,000 $ Future events Medium 25,000 $ 0 $ Medium $110,000 $135,000 High 35,000 $ + 0 . $ High $155,000 $190,000 Maximum 35,000 Given the uncertainty associated with the demand volume, and no other information to work with, what decision would you make? The aggressive strategy (maximax) is to choose the -Select- The conservative strategy (maximin) is to choose the -Select- The opportunity loss strategy is to choose the -Select- 30,000

Practical Management Science
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...
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Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Low Decision Basic model Advanced model $90,000 $60,000 Fill in the table below for maximum and minimum profit payoffs under each model. Round your answers to the nearest dollar. Decision alternative Basic model Advanced model Opportunity Loss Matrix Decision alternative Basic model Maximum Advanced model Low 0 $ Calculate the amounts foregone by not adopting the optimal course of action for each possible demand level. Determine the maximum opportunity cost for each model. Fill in the table below. If your answer is zero, enter "0". Round your answers to the nearest dollar. 30,000 Minimum Future events $ $ Medium 25,000 $ 0 $ High + Demand Volume + 35,000 Medium $110,000 $135,000 + 0 $ High $ 155,000 $190,000 Maximum Given the uncertainty associated with the demand volume, and no other information to work with, what decision would you make? The aggressive strategy (maximax) is to choose the -Select- The conservative strategy (maximin) is to choose the -Select- The opportunity loss strategy is to choose the -Select- 35,000 30,000
Transcribed Image Text:Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand. The following table presents an estimate of profits over the next three years. Low Decision Basic model Advanced model $90,000 $60,000 Fill in the table below for maximum and minimum profit payoffs under each model. Round your answers to the nearest dollar. Decision alternative Basic model Advanced model Opportunity Loss Matrix Decision alternative Basic model Maximum Advanced model Low 0 $ Calculate the amounts foregone by not adopting the optimal course of action for each possible demand level. Determine the maximum opportunity cost for each model. Fill in the table below. If your answer is zero, enter "0". Round your answers to the nearest dollar. 30,000 Minimum Future events $ $ Medium 25,000 $ 0 $ High + Demand Volume + 35,000 Medium $110,000 $135,000 + 0 $ High $ 155,000 $190,000 Maximum Given the uncertainty associated with the demand volume, and no other information to work with, what decision would you make? The aggressive strategy (maximax) is to choose the -Select- The conservative strategy (maximin) is to choose the -Select- The opportunity loss strategy is to choose the -Select- 35,000 30,000
The aggressive strategy (maximax) is to choose th✔ The conservative strategy (maximin) is to choose t The opportunity loss strategy is to choose the -Select- -Select- advanced model basic model
Transcribed Image Text:The aggressive strategy (maximax) is to choose th✔ The conservative strategy (maximin) is to choose t The opportunity loss strategy is to choose the -Select- -Select- advanced model basic model
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