Which option has the highest expected monetary value

Assignment Help Operation Management

Reference no: EM131357000

James Lawson's Bed and Breakfast, in a small historic Mississippi town, must decide how to subdivide (remodel) the large old home that will become its inn. There are three alternatives: Option A would modernize all baths and combine rooms, leaving the inn with four suites, each suitable for two to four adults. Option B would modernize only the second floor; the results would be six suites, four for two to four adults, two for two adults only. Option C (the status quo option) leaves all walls intact. In this case, there are eight rooms available, but only two are suitable for four adults, and four rooms will not have private baths. Below are the details of profit and demand patterns that will accompany each option:

	Annual profit under various demand patterns
Alternatives	High	P	Average	P
A (modernize all)	$90,000	.5	$25,000	.5
B (modernize 2nd)	$80,000	.4	$70,000	.6
C (status quo)	$60,000	.3	$55,000	.7

Which option has the highest expected monetary value?

Reference no: EM131357000

Questions Cloud

Match the flowcharting segments with the descriptions : Match the flowcharting segments with the descriptions to which they correspond. Four descriptions will be left blank.- Data on source documents are keyed to an offline disk.

First investment occurs at end of your first year of work : Assume that you have 40 years until retirement and have just started your first job. Once you retire, you anticipate that you will live for 30 additional years. Assume that you will require $100,000 per year to support yourself in retirement. Assume ..

What in your mind is the right thing to do : What in your mind is the right thing to do? What is value of having an ethics program and what are responsibilities of front line leaders/supervisors and the workers when they face dilemmas such as the one described?

Summarize the key points presented in the article : Summarize the key points presented in the article.Describe the key elements of a solid emergency response program.Discuss why proper decontamination of victims is important.Discuss your opinion or what you can conclude from the article.

Which option has the highest expected monetary value : James Lawson's Bed and Breakfast, in a small historic Mississippi town, must decide how to subdivide (remodel) the large old home that will become its inn. Which option has the highest expected monetary value

What is the financial and cash break-even quantity : A project has the following estimated data: price = $56 per unit; variable costs = $35 per unit; fixed costs = $18,500; required return = 8 percent; initial investment = $45,000; life = five years. Ignoring the effect of taxes, What is the accounting..

Calculate annual return on the mutual funds : Suppose an individual invests $29,000 in a load mutual fund for two years. The load fee entails an up-front commission charge of 3.3 percent of the amount invested and is deducted from the original funds invested. calculate the annual return on the m..

Identify a business in your local community : Identify a business in your local community. This can be your current place of employment or a business with which you are familiar.Develop an examination of the ethics and social responsibility practices within the organization. Include the foll..

Accurately identify the given articles premise : For this assignment, you will need to accurately identify the article's premise, significant points in support of the premise, and the significance of those points to the course and/or the field.

User Account

All Pages