Reference no: EM132351772

Question 1

In order to assist the manager, you have been asked to compile a resource which will define the various management terms. Provide an explanation of the following terms, with examples specifically relating to Boutique Catering, to include in a resource file which incorporates a reason why each concept is relevant (or not relevant) to decision-making:

Optimistic

Pessimistic

Criterion of realism

Equally likely

Minimax regret

Question 2

Boutique Catering is considering expanding the business by preparing frozen meals that will be home-delivered. The meals will then only require to be heated up by the customer. As a point of difference, the meals will be cooked according to the CSIRO Total Wellbeing recipe book. The meals Boutique Catering will offer are everyday, vegetarian and specialty meals (for people who have allergies).

After conducting a mail survey of the local area, a probability table of likely sales of frozen meals was created below.

Number of frozen meals	Probability
1	0.05
2	0.10
3	0.15
4	0.20
5	0.20
6	0.15
7	0.10
8	0.05

What is the expected value and variance of the number of frozen meals sold?

Prepare a one-page memo for management analysing the results. In your explanation advise management on the best outcome.

Question 3

The manager at Boutique Catering has requested a second analysis be conducted as they believe that there is a 50-50 chance the frozen meals will be successful. If the demand for frozen meals is favourable, Boutique Catering could realise a profit of $200,000. If the market is not favourable, they will lose $50,000 or they could do nothing. Construct a decision tree to help analyse the problem.

Question 4

Boutique Catering is considering purchasing all or a portion of the conference centre next door. The area available in total is 200 square metres with annual returns depending on the size of area that is purchased. An analysis has be developed in the following table:

Area of conference centre purchased	Strong market	Average market	Weak market
50	100,000	40,000	-20,000
100	160,000	60,000	-40,000
150	100,000	60,000	-80,000
200	400,000	50,000	-320000

Develop a decision table and identify the following:
What is the maximax decision?
What it the maximin decision?
What it the equally likely decision?
What is the minimax decision?