The General Manager of GEN Airlines wanted to make a decision as to whether Dodoma, the capital city of Tanzania, could be a candidate for a new destination. According to her, there are two options. These options are 1 day a week or 7 days a week. The subject was researched by a group that provided decision support to the management. The group stated that the success of the destination to be opened depends on whether the market's demand is favourable or unfavourable. It has been determined that the fixed costs for both alternatives will be 70,000 TL per month, and the cost of the daily round-trip of aircraft between Istanbul and Dodoma will be 15,000 TL per round trip. It has been learned that a plane of 120 people will be planned for the new destination. It has been determined that when the market is favourable, a round trip will be 50% full on average, and if there is only one round trip flight per week, the occupancy of this round-trip flight will increase to 80%. It has been determined that when the market is unfavourable, the rates in favourable times will decrease by half. The group also considered that it would be possible to never open the new destination. One way ticket price is 600 TL.

QUESTIONS:

1. Prepare the decision table for the solution of the decision problem.

2. A group of analysts claimed that the Chairman of the Board of GEN Airlines was a pessimist. What will be decision in that case?

3. After discussing in the group whether the manager was pessimistic or not, it was determined that the probability of both positions was 50 % for being pessimistic or optimistic. What will be decision in that case?

4. Finally, the group agreed that it would be better to use a method that minimizes the loss of opportunity. What will be decision in that case?

5. Solve Questions-2, Questions-3 and Questions-4 by Quantitative Methods (QM) Tools in computer and provide solution files for each.

6. In the given situation, it has been determined that the probability of the market being favourable and unfavourable is 30% and 70%, respectively. What is the long-run average return if we have perfect information before a decision is made? (EVwPI)?

7. In the given situation, it has been determined that the probability of the market being favourable and unfavourable is 30% and 70%, respectively. What is the upper bound on what you should pay for additional information? (EVPI)?

8. Apply one-way sensitivity analysis to this problem and find out probability values that make alternatives different form each other?

9. Please set up your decision tree with all necessary elements