The OC company has purchased a land and is considering condominium development Three sizes of developments are being considered small, medium, and large An uncertain economy makes it difficult to ascertain the demand for new condominiums With the three levels of demand low, medium, and high management has determined the profit or loss the company realizes, as shown in the following table (in $1000's) Demand Decision Low Medium High Small 400 400 400 Medium 100 600 600 Large 300 300 900 Suppose OC company estimates the following probabilities hold for condominium demand P(low) 0 35 P(medium) 0 2 P(high) Question text What is OC Company's regret value (in $1,000's) for small development if demand for new condominiums turns out to be high Select one a 900 b 500 c 400 d 0 Question text What is OC Company's optimal decision if it wishes to minimize its maximum regret Select one a Small Development b Medium Development c Large Development d More than one size development can be made Question text What is OC Company's optimal decision if it uses the principle of insufficient reason Select one a Small Development b Medium Development c Large Development d More than one size development can be made Question text What is OC Company's optimal decision using pessimistic criteria Select one a Small Development b Medium Development c Large Development d More than one size development can be made Question text For optimistic criteria, what is the payoff value for Medium Development Select one a $300,000 b $600,000 c $400,000 d $100,000 Question text What is OC Company's optimal decision if it uses the optimistic criteria Select one a Small Development b Medium Development c Large Development d More than one size development can be made Question text What is the expected value of Large Development Select one a $900,000 b $360,000 c $450,000 d $150,000 Question text What is OC Company's optimal decision if it uses the expected value criteria Select one a Small Development b Medium Development c Large Development d More than one size development can be made Question text What is the most that OC Company should pay for sample information regarding the market conditions Select one a $170,000 b $195,000 c $240,000 d Can't be determined Question text OC Company is not certain about the payoff for large development if demand is high What level of payoff will result in large development using expected value criteria Select one a 1 million dollars b more than 2 million dollars c between 1 and 1 1 million dollars d $900,000 0 45

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The OC company has purchased a land and is considering condominium development. Three sizes of developments are being considered: small, medium, and large. An uncertain

The OC company has purchased a land and is considering condominium development. Three sizes of developments are being considered: small, medium, and large. An uncertain economy makes it difficult to ascertain the demand for new condominiums. With the three levels of demand - low, medium, and high - management has determined the profit or loss the company realizes, as shown in the following table (in $1000's).

Demand
		Decision	Low	Medium	High
		Small	400	400	400
		Medium	100	600	600
		Large	-300	300	900

Suppose OC company estimates the following probabilities hold for condominium demand:

	P(low) =		0.35
	P(medium) =		0.2
	P(high) = Question text What is OC Company's regret value (in $1,000's) for small development if demand for new condominiums turns out to be high? Select one: a. 900 b. 500 c. 400 d. 0 Question text What is OC Company's optimal decision if it wishes to minimize its maximum regret? Select one: a. Small Development b. Medium Development c. Large Development d. More than one size development can be made Question text What is OC Company's optimal decision if it uses the principle of insufficient reason? Select one: a. Small Development b. Medium Development c. Large Development d. More than one size development can be made Question text What is OC Company's optimal decision using pessimistic criteria? Select one: a. Small Development b. Medium Development c. Large Development d. More than one size development can be made Question text For optimistic criteria, what is the payoff value for Medium Development? Select one: a. -$300,000 b. $600,000 c. $400,000 d. $100,000 Question text What is OC Company's optimal decision if it uses the optimistic criteria? Select one: a. Small Development b. Medium Development c. Large Development d. More than one size development can be made Question text What is the expected value of Large Development? Select one: a. $900,000 b. $360,000 c. $450,000 d. $150,000 Question text What is OC Company's optimal decision if it uses the expected value criteria? Select one: a. Small Development b. Medium Development c. Large Development d. More than one size development can be made Question text What is the most that OC Company should pay for sample information regarding the market conditions? Select one: a. $170,000 b. $195,000 c. $240,000 d. Can't be determined Question text OC Company is not certain about the payoff for large development if demand is high. What level of payoff will result in large development using expected value criteria? Select one: a. 1 million dollars b. more than 2 million dollars c. between 1 and 1.1 million dollars d. $900,000		0.45