H town is located in the country of Ceeland and has a park and botanical garden which has been run by the local government for many years. Although the local government operates on a not-for-profit basis it does allow facilities such as the park to generate a surplus (profit) so as to help fund other projects that benefit the community. As such all visitors to the park are charged an entrance fee and there are also a number of revenu

generating cafes located in the facility.

Each year the local gevernment has to decide how much of the park to open as there are incremental costs in terms of planting, maintenance, and statfing, which are dependent on how much of the park is open. The

parkland is divided into a large park and a small park; it is possible to open beth parks tegether or just one of them individually. The number of visitors is dependent on the weather, if there is a good summer then visitor numbers will be high. If there is a poor summer, then visiter numbers will be law

One of the junior accountants in the local government has prepared a payoff table to show the different amounts of contribution generated depending on the weather and the choice of how much of the park to open:

DEMAND both parks large small

high 1093000 820000 460000

medium 602000 820000 460000

low 121000 488000 460000

Past experience has shown that a good summer occurs 32% of the time, while there is a 50% chance of an

average summer, and a 18% chance that the summer will be poor.

a. Explain what is meant by each of the following

decision rules and use the figures from the pay-off

table to calculate how much of the park to open

under each technique

b. Make a recommendation as to which of the

techniques in (a) is most suitable in this scenario

and justify the reasons for your recommendation.

C. The local government is also responsible for

running a number of schools in the area. It was

Suggested in recent meeting that because the

schools are not-for-profit organisations they should be assessed on the basis of economy, effectiveness and efficiency. Explain the meaning of the terms in the context of performance measurement and, for

each one, suggest a measure appropriate to a

school.