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A manager has compiled estimated profits for various capacity alternatives but is reluctant to assign probabilities to the states of nature. The payoff table is
A manager has compiled estimated profits for various capacity alternatives but is reluctant to assign probabilities to the states of nature. The payoff table is as follows: |
STATE OF NATURE | |||
#1 | #2 | ||
A | $ 20* | 143 | |
Alternative | B | 127 | 88 |
C | 96 | 52 | |
*Profit in $ thousands.
b. | Is there any alternative that would never be appropriate in terms of maximizing expected profit? | ||||||||
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c. | For what range of P (2) would alternative A be the best choice if the goal is to maximize expected profit? |
Choose Alternative A if P(#2) is (Click to select)less than .7less than .660greater than .660greater than .7. |
d. | For what range of P (1) would alternative A be the best choice if the goal is to maximize expected profit? |
Choose Alternative A if P(#1) is (Click to select)greater than .25greater than .340less than .25less than .340. |
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