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  3. answer b c and d...

Question: answer b c and d...

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2. A certain company needs to acquire additional help to keep with its increased demand during the Christmas season. The manager considering two options. He will either hire 10 people or offer overtime to the curren employees. After analyzing the history of profit yielded in past Christmas seasons, he has determined the pay off values for each choice in a high or low demand scenario. The payoff table is given below. The probability of a high demand in the upcoming Christmas season is 45%. State of Nature Decision 5 High Demanc Demand 15 di Hire 10 15 dn Overtime EV 14 12 10 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 (a) Formulate an expected value function for each decision alternative and graph both functions above. (b) Using the probability nformation, should the company hire employees to fulfill expected demand in the mas or should it offer overtime to its employees? What profit should the company expect to make? Christ Fall 2018 Page 3 of 4 Math 446

(e) For what range of probabilities of high demand, would the answer in part (b) remain optimal? Uise sensitivity analysis to justify your answer. (d) What is the most that the company shouid pay a market research analyst to provide demand information? value of prect is formation Fall 2018 Math 446 Page 4 of4

answer b, c, and d.

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