Develop a decision analysis formulation for this problem

Assignment Help Financial Management
Reference no: EM131999181

What the student should do. A group of young ISE students would like to have a party in order to fund their spring break activities; however, they are not sure where to hold their party.

They can rent three possible locations. The possible locations, fixed rental price, maximum capacity at each location, and the variable cost per person for the food/drink menu is summarized in the table below.

The student plan to order enough food/drinks to cover the maximum capacity at the rental location They are selling tickets to this event for S20. However, the number of people who will buy a $20 ticket is not known with certainty. The number sold can be low (80 tickets), medium (100 tickets), or high (120 tickets).

There is a 25% chance that 80 tickets can be sold; 35% chance that 100 tickets can be sold, and 40% chance that 120 tickets can be sold. Assume every person that buys a ticket will attend the event. If the event is oversold (that is the number of people who show up is more than the capacity at the venue), then they give a refund to the people who cannot get in the party.

The students are trying to figure out what they should do in order to earn the highest possible profit from their party.

Develop a decision analysis formulation for this problem and determine the best course of action.

Define the decision alternatives

Define the states

Construct the payoff matrix table

Which decision should the students take under the expected value criterion?

Which decision should the students take when using the Minimax Regret criterion?

Assuming that the students are optimistic (that they make the decisions under the maxima decision criterion), what decision would you recommend?

Assuming that the students are pessimistic(Maximin), which decision would you recommend?

Reference no: EM131999181

Questions Cloud

Write a personal reflection on allocation of project plan : Develop the project plan to finish the project. The project plan will be used to present the detailed parameters of the project for signoff by the Project
How can you explain the differences in the three forecasts : How can you explain the differences in the three forecasts in (e)? What forecast do you think you should use? Why?
How expensive a car can she afford on the dealers terms : This student finds a car she likes and the dealer offers to arrange financing. His terms are 12% interest for 72 months and no down payment.
What should an ounce of gold be worth in us dollars : Suppose that Britain pegs the pound to gold at six pounds per ounce, whereas the exchange rate between pounds and U.S. dollars is.
Develop a decision analysis formulation for this problem : What the student should do. A group of young ISE students would like to have a party in order to fund their spring break activities;
Project plan - cornerstone securities case study : Project Management - Describe how the group worked together to submit an appropriate Part A Project Plan - Describe the allocation of Part A Project Plan work
Develop a cogent conclusion as to the financial health : A financial statement analysis of the organization utilizing free cash flow, market value added and economic value added.
Why do storage costs increase the price of a futures : Why do storage costs increase the price of a futures contract (F0) while income such as dividends decreases their price?
Advise soc to take or to reject this replacement project : The Stodio Olimpico Corporation (SOC) is considering the purchase of a new machine to replace the existing one to increase.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd