Consider a manufacturer of perfume who is about to expand production capacity to make a new product. Three alternative production processes are available. The following table shows the estimated profits (in $) for these processes for each of the three possible demand levels for the product. Alternatives States of Nature Low demand Moderate demand High demand A 100,000 350,000 900,000 B 150,000 400,000 700,000 C 250,000 400,000 600,000 Based on the above information, what would be the amount of regret, if alternative production process B is selected by the manufacturer and suppose that the level of demand turns out to be low?
Consider a manufacturer of perfume who is about to expand production capacity to make a new product. Three alternative production processes are available. The following table shows the estimated profits (in $) for these processes for each of the three possible demand levels for the product. Alternatives States of Nature Low demand Moderate demand High demand A 100,000 350,000 900,000 B 150,000 400,000 700,000 C 250,000 400,000 600,000 Based on the above information, what would be the amount of regret, if alternative production process B is selected by the manufacturer and suppose that the level of demand turns out to be low?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 30P
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Consider a manufacturer of perfume who is about to expand production capacity to make a new product. Three alternative production processes are available. The following table shows the estimated profits (in $) for these processes for each of the three possible demand levels for the product.
Alternatives | States of Nature | ||
Low demand | Moderate demand | High demand | |
A | 100,000 | 350,000 | 900,000 |
B | 150,000 | 400,000 | 700,000 |
C | 250,000 | 400,000 | 600,000 |
Based on the above information, what would be the amount of regret, if alternative production process B is selected by the manufacturer and suppose that the level of demand turns out to be low?
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