An airine decided to offer direct service from City Ate GRY . Management must decide between a full price service using the company's new fleet of je erat and a discount service using smaller Capacity commuter les it is clear that the best choice depends on the market reaction to the service the airline offers. Management developed estimates of the contribution to profit for each type of service based upon two possible levels of demand for service to the airline: strong and weak. The following table shows the estimated quarterly profits (in thousands of dollars) Den and for Service Service Strong Weak Pull price 950 - 3500 Discount 1600 $350 (a) What is the desion to be made, what is the chance event, and what is the contence for this problem? The desion to be made The chance eventuele How many decision alternatives are there? The conced How many outcomes are there for the chance event? (5) nothing is known about the probabilities of the chance outcomes, what is the recommended decision using the optim, conservative, and minimax regret approaches? The recommended decision using the optimistic approach is the service. The recommended decision using the conservative approach is the service. The recommended decision using the minimeregret approach is the bed service Support the management of the rine believes that the probability of strong demand is 0.7 and the probability of weak demands 0.3. Use the expected value approach to determinen optimal decision (Enter your answers in thousands of dollars) EV) thousands Vascount) thousands The optimal desion is the service (d) Suppose that the probably strong demand is 0.5 and the protity of weak demand is 0.2. What is the optimal decision using the expected Value proach (inter your answers in thousands of dollars) thull thousands EV) thousands The optimal deosion is the Service e graphical sensitivity ways to determine the range of demand probabilities for which each of the decision alternatives has the largest expected value (Round your answer to four decimal places) at the probability of strong demand fats below the Select service is the best choice of the probability of strong demand greater than the service is the best choice -Selech An airine decided to offer direct service from City Ate GRY . Management must decide between a full price service using the company's new fleet of je erat and a discount service using smaller Capacity commuter les it is clear that the best choice depends on the market reaction to the service the airline offers. Management developed estimates of the contribution to profit for each type of service based upon two possible levels of demand for service to the airline: strong and weak. The following table shows the estimated quarterly profits (in thousands of dollars) Den and for Service Service Strong Weak Pull price 950 - 3500 Discount 1600 $350 (a) What is the desion to be made, what is the chance event, and what is the contence for this problem? The desion to be made The chance eventuele How many decision alternatives are there? The conced How many outcomes are there for the chance event? (5) nothing is known about the probabilities of the chance outcomes, what is the recommended decision using the optim, conservative, and minimax regret approaches? The recommended decision using the optimistic approach is the service. The recommended decision using the conservative approach is the service. The recommended decision using the minimeregret approach is the bed service Support the management of the rine believes that the probability of strong demand is 0.7 and the probability of weak demands 0.3. Use the expected value approach to determinen optimal decision (Enter your answers in thousands of dollars) EV) thousands Vascount) thousands The optimal desion is the service (d) Suppose that the probably strong demand is 0.5 and the protity of weak demand is 0.2. What is the optimal decision using the expected Value proach (inter your answers in thousands of dollars) thull thousands EV) thousands The optimal deosion is the Service e graphical sensitivity ways to determine the range of demand probabilities for which each of the decision alternatives has the largest expected value (Round your answer to four decimal places) at the probability of strong demand fats below the Select service is the best choice of the probability of strong demand greater than the service is the best choice -Selech
