TEST 3. DECISION ANALYSIS. (10 Marks) Direction: Read, Analyze and calculate what are required. Mary is considering the possibility of opening a small dress shop on Avenue, a few blocks from the university. She has located a good mall that attracts students. Her options are to open a small shop, a medium-sized shop, or no shop at all. The market for a dress shop can be good, average, or bad. The probabilities for these three possibilities are 0.2 for a good market, 0.5 for an average market, and 0.3 for a bad market. The net profit or loss for the medium-sized and small shops for the various market conditions are given in the following table. Building no shop at all yields no loss and no gain. Alternative Good Market Average Market Bad Market Small shop 30,000 75,000 -40,000 Medium Sized shop 55,000 80,000 -60,000 No shop 0 0 0 a. Calculate the EMV criterion (2Marks) b. Prepare the EVPI. (4 Marks) c. Develop the opportunity loss table for this situation. What decisions would be made using the minimum EOL criterion? (4 Marks) TEST 4. ASSINGMENT MODEL. (10 Marks) Direction: Read, Analyze and Calculate what required. Five jobs J1, J2, J3,J4 and J5 are to be assigned to five persons P1,P2, P3 ,P4 and P5. The processing costs are given in the following matrix. Find the optimal assignment which will lower the total processing cost.(2 marks per optimal assignment X 5=10 marks) Jobs Person J1 J2 J3 J4 J5 P1 32 38 40 28 40 P2 40 24 28 21 36 P3 41 27 33 30 37 P4 22 38 41 36 36 P5 23 33 40 35 39 TEST 5. LINEAR PROGRAMMING .(10 Marks) Direction: Read, Analyze and Calculate what required. A company has fixed costs of $200,000 and produces one product with a selling price of $80.00 and a variable cost of $50.00 per unit. The maximum factory capacity is 30,000 units and it anticipates selling 20,000 units. a- the mathematical model that represents the profit. (2 marks) b-How much profit will they make at the present level of operation? (2 marks) c-How much tables must the company sells to break even? (2 marks) d-Determine the sales unit that the firm will have to reach if it is to make $20,000 profit per period. (2 marks) e-How much profit will they make if sales increase to the maximum that the factory can supply? (2 marks)