Solution-What size station should milton consider using the

What size station should milton consider using the emv

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Reference no: EM133093203

John Junior is contemplating starting his own independent gasoline station near the Linstead leg on the north-south highway. His problem is to decide how large the gasoline station should be. The annual returns will depend on both the size of the station and the market condition (good, fair, poor) for gasoline near the Linstead leg on the north-south highway. After careful analysis the following table was developed

Size of Station	Good Market ($)	Fair Market ($)	Poor Market ($)
Small	50,000	20,000	-10,000
Medium	80,000	30,000	-20,000
Large	100,000	30,000	-40,000
Very Large	300,000	25,000	-160,000

If Milton is optimistic, what decision should he make
If Milton uses the equally likely criteria, what decision should he make
If Milton is pessimistic what would be his decision
To minimise his maximum regret which decision should Milton make

Information gathered informs that the probability for a good market is 25% and poor market is 30%.

What size station should Milton consider using the EMV criteria
How much should Milton pay the Gasoline Retailers Association for perfect information

Reference no: EM133093203

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What size station should milton consider using the emv

Reference no: EM133093203

Reference no: EM133093203

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