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The owner of the Party City Toronto Company must decide among building a mega centre store, building 5 new stores, or leasing 10 of their
The owner of the Party City Toronto Company must decide among building a mega centre store, building 5 new stores, or leasing 10 of their locations to another company. The profit that will result from each alternative will be determined by whether material costs remain stable, increase moderately, or increase significantly. In the payoff table below the estimated profits/losses are given in $thousands. Material Costs Moderate Significant Stable Increase Increase Mega 1940 840 -460 Centre Decision New Stores 1800 450 -2450 Leasing 550 900 800 Determine the best decision using the Hurwicz criterion with a = 0.1. O Decision: New Stores based on -2025 = min(-220,-2025,775) O Decision: Stable based on 689 = max(689,495,-2125) O Decision: Leasing based on 585 = max(-220,-2025,585) O Decision: Mega Centre based on 1700 = max(1700, 1375,865)
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