What is the recom- mended decision using the optimistic

Assignment Help Operation Management

Reference no: EM13215418

Myrtle Air Express decided to offer direct service from Cleveland to Myrtle Beach. Management must decide between a full-price service using the company's new fleet of jet aircraft and a discount service using smaller capacity commuter planes. It is clear that the best choice depends on the market reaction to the service Myrtle Air offers. Management developed estimates of the contribution to profit for each type of service based upon two possible levels of demand for service to Myrtle Beach: strong and weak. The following table shows the estimated quarterly profits (in thousands of dollars).

Demand for Service

Service ------Strong--- Weak
Full Price-- $960------ (-$490)
Discount--- $670--------$320

b. If nothing is known about the probabilities of the chance outcomes, what is the recom- mended decision using the optimistic, conservative, and minimax regret approaches?

c. Suppose that management of Myrtle Air Express believes that the probability of strong demand is 0.7 and the probability of weak demand is 0.3. Use the expected value approach to determine an optimal decision.

d. Suppose that the probability of strong demand is 0.8 and the probability of weak demand is 0.2. What is the optimal decision using the expected value approach?

Reference no: EM13215418

Questions Cloud

The constant dividend growth rate and what the stock price : We would expect that, all else being equal, investors would pay less for a stock that they view as having become more risky. Assume a stock has just paid a $2.00-per-share dividend. Analysts believe that future dividends will grow at a 14% rate. T..

Create a web page online reservation system : create a web page online reservation system. (feedback page and package pake )

Explain the difference between conflict and competition : Conflict resolution is a necessary skill for any manager or leader. In this assignment, you will examine the difference between conflict and competition.

Explain decision support systems : Decision support systems: Modeling and Analysis question - Why are models not used in industry as frequently as they should or could be?

What is the recom- mended decision using the optimistic : what is the recom- mended decision using the optimistic, conservative, and minimax regret approaches and what is the optimal decision using the expected value approach?

Managed care has caused the us health care system : Managed care has caused the US health care system to

What extent these aspects of control work in organizations : Discuss to what extent these two aspects of control work together in successful organizations. Be sure to give an example or two to support the position you take on this.

Changing weather conditions : Perhaps more than any other single measurement, atmospheric pressure is the best indicator of current and changing weather conditions.” Explain and discuss why this statement is correct. Provide some examples

What is the optimal number of employees at checkout : Atlantic Video, a small video rental store in Philadelphia, is open 24 hours a day, and-due to its proximity to a major business school-experiences customers arriving around the clock. A recent analysis done by the store manager indicates that the..

User Account

All Pages