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Question 3 Based on the context in Question 2, the FunnyBear Company is planning for future productions. While most aspects of the problem are the
Question 3 Based on the context in Question 2, the FunnyBear Company is planning for future productions. While most aspects of the problem are the same as before, two aspects are not certain: o The unit contribution to earnings of selling full-sized dolls is uncertain due to uctuations in the market. Suppose the estimated unit contribution to earnings of full-size dolls will be in the range between $22 and $35. For the sake of simplicity, let us suppose that this unit earnings contribution will be either $22 (with a probability of 0.5) or $35 (with a probability of 0.5). o The capacity for the general assembly labour hours is uncertain. There are more available workers in the free market. Let us suppose the general assembly labour hours for the next quarter will be either 400 hours (with probability 0.4) or 500 hours (with probability 0.6). The company needs to decide whether it should continue its operation or terminate the current business plan. (a) (1)) Decide the objective of this problem considering the given uncertainties. Are you conservative or optimistic? Justify your answers. (10 marks) If you are a risk-neutral decision maker, evaluate the given details and then formulate this optimization problem under uncertainty. (1 7 marks)
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