Question 1:
Problem A If the CEO wants to plan expansion in two new states, which should he choose, and what is the expected total cost?
| |
Declining |
Same |
Improving |
EMV |
| State |
0.25 |
0.4 |
0.35 |
|
| Kentucky |
22 |
19 |
15 |
18.35 |
| Maryland |
19 |
19 |
18 |
18.65 |
| North Carolina |
19 |
17 |
15 |
16.8 |
| Tennessee |
23 |
17 |
14 |
17.45 |
| Virginia |
25 |
21 |
13 |
19.2 |
|
|
|
|
|
| Max |
25 |
21 |
18 |
|
| Payoff of decision made with perfect information |
19.2 or Virginia |
|
|
|
|
|
|
|
|
|
|
EMVPI |
20.95 |
|
|
|
Max EMV |
19.2 |
|
|
|
EVPI |
1.75 |
Problem B Which two states would you build in if you know the national economy will decline?
Tennesse 2
Kentucky 3
Which two states would you build in if you know the national economy will remain stable?
Virgina
Maryland & Kentucky
Which two states would you build in if you know the national economy will improve?
Maryland
Kentucky/North Carolina
Question 2:
Problem A Construct a decision tree to model this decision problem.
(Start your tree in cell B24 so you have enough room for the tree. There is also a data table started for you in cell T7)
Problem B "Will you tell the personnel manager to hire 3 or 4 full-time people?
Problem C "Find the hourly overtime that reverses your decision. Record your response on the ""Part 2-Response Tab"".
(You may copy your data from the Part 2 tab to complete this calculation).
Attachment:- DecisionAnalysis_Lowery.xlsx