, Decision Making Under Uncertainty 1.- The News Vendor Problem: A newsvendor must determine in a daily basis how many newspapers to purchase in order to obtain the maximum profit. Each news paper is sold by $12.00 and purchased at the local distributor for $5.00. If the newspaper demand exceeds the amount purchased, there is an opportunity cost to the news vendor of $7.00 in profits not achieved, whereas if the demand is fewer than purchased, the news vendor may sell the remaining issues at 50% of its purchasing price. It has been observed that the demand may fluctuate between 1 and 16 news papers in a daily basis. Analyze the case stated above according with the following criteria: a. Identify the decision variables, the output variables and the factors that may be uncontrollable. b. Define the reward/cost function that defines this situation c. Build the two way decision matrix d. Find the best alternative given the Maximum Expected Value e. Find the best alternative that minimizes the cost of opportunity f. Create a matrix table in Power Bi to visualize the possible decisions. 2. A car dealer runs a business where she purchases cars to a bid price and sells to an ask price. She must decide how many cars to purchase at the beginning of the year to sell. She classifies the cars in three categories: Recent (less than one year of use), on year old (more than one year but less than 2), 2 years old and 3 years old. The demand is uncertain and she has observed that in a year she may sell a minimum of 10 cars to a maximum of 100 cars. A car that is 3 years old but couldnt be sold by the end of the year may be sold to a salvage value of $750 usd for spare parts. The following information is obtained from the business: The distribution % represents how many cars of each type she plans to buy at the beginning of the year. Overhead costs are the following: Car model Distribution Bid Ask Sales Comission Salvage value Recent 85% $ 15,000 $ 25,500 1% 0 1 year 10% $ 7,500 $ 12,750 1% 0 2 year 5% $ 3,000 $ 5,100 1% 0 3 year 0% $ 1,000 $ 1,700 1% $ 750.00 What is the best purchasing decision such that the EBITDA is maximized? Analyze the case stated above according with the following criteria: a. Identify the decision variables, the output variables and the factors that may be uncontrollable. b. Define the reward/cost function that defines this situation c. Build the two way decision matrix d. Find the best alternative given the Maximum Expected Value e. Find the best alternative that minimizes the cost of opportunity. f. Create a table in Power BI to visualize the possible decisions. 3.- Suppose that a Pizza King and Noble Greek stop advertising but must determine the price they will charge for each pizza sold. Pizza King believes that Noble Greeks price is a random variable D having the following mass function: If Pizza King Charges a price p1 and Noble Greek charges a price of p2, Pizza King will sell 100 + 25(p2-p1) pizzas. It costs Pizza King $4 to make a pizza. Pizza King is considering charging $5, $6, $7, $8, or $9 for a pizza. a. Use the Minimax with cost of opportunity criterion to decide the appropriate price to be charged for a pizza. b. Use the Maximum expected reward criteria to decide the appropriate price to be charged. c. What price decision will provide Pizza King with the highest expected reward and at what volume according with the information at a and b? d. Build a report in Power BI to visualize the possible outcomes. Depreciation (annual) on cars 30% Overhead Costs Property taxes on the facility $ 2,750 Rent on the building $ 30,000 Salaries of cleaning & maintenance personnel $ 15,000 Salaries of sellers $ 20,000 Salaries of administrative staff $ 30,000 Supplies not directly associated with cars $ 5,000 Utilities for the car lot $ 7,500 Advertising $ 5,000 Insurance (liability, accidents, etc.) per year $ 7,500 P(D=6)= 0.25 P(D=8)= 0.5 P(D=10)= 0.25 If Pizza King Charges a price p1 and Noble Greek charges a price of p2, Pizza King will sell 100 + 25(p2-p1) pizzas. It costs Pizza King $4 to make a pizza. Pizza King is considering charging $5, $6, $7, $8, or $9 for a pizza. a. Use the Minimax with cost of opportunity criterion to decide the appropriate price to be charged for a pizza. b. Use the Maximum expected reward criteria to decide the appropriate price to be charged. c. What price decision will provide Pizza King with the highest expected reward and at what volume according with the information at a and b? d. Build a report in Power BI to visualize the possible outcomes.

Solve and submit the three cases about Decision Making under Uncertainity from the pdf file. You may choose bettween Excel and Power BI to work on your assignment.

Submit an Executive Report with the answers to each of the three Cases.