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1. Sarada and Sunitha are childhood friends. They entered in to the same college with same specialization. They are going to graduate with degrees in Marketing. After their graduation to get experience they both decided to start a small company that would provide word processing services to students who needed to prepare their reports in a professional manner. Using a systems approach Sarada and Sunitha have identified three strategies. These strategies along with the payoffs are listed in the table below: Strategies Favorable Market Unfavorable market Strategy 1 10,000+a -7000+C Strategy 2 5,000+b -2000+a Strategy 3 2,000+a 300 It is also known that the probability of Favorable market condition is 60% a. What type of decision environment is it, Explain about that environment? (5 marks) b. What will be the decision of Sarada and Sunitha? c. Compute the expected value of perfect information? (12 marks) (8 marks) 2. A Doll making firm is bringing out a new type of remote control doll. The firm is attempting to decide whether to bring out a full, partial or minimal product line. The company has three levels of product acceptance Management will make its decision based on maximizing the expected profit from the first year of production. The relevant data are shown in the following table. Anticipated first year Profit(1,000$) Product line Product Acceptance Full Partial Good 80+ b 90+a Fair 100 45+c Poor -30+ a - 10+a Determine the optimal decision under Optimistic decision criteria Minimal 60 40+b 0 (10 marks) 3. Amrutha Bhavan Hotels group is planning to introduce some new varieties of snacks as per the feedback received from their customers. Some new arrangements and further steps are required to make so that the preparation of snacks will meet the expectations of the regular customers and attract new customers. The following table provides information about tasks involved in making such arrangements. Draw the network diagram and determine that how long it will take to come up with the new varieties of snacks to satisfy their customers? (25 marks) ACTIVITY IMMEDIATE PREDECESSORS A B D TIME (DAYS) 3 + a 4 6 + b 2 + d 5 + a 2 + a + b 4+c 5 A B A DE F G E F G H 4. Jokha wants to invest her 5000 $ money. Three alternatives are available to her to invest the money. Suggest Jokha, which will be more profitable to invest her money. The payoff matrix is given below. Draw the associated decision tree and specify the course of action for Jokha. (18 marks) Alternatives Stocks Mutual funds Bonds States of nature Growing (in thousands) Declining(in thousands) 70 + a -13 + b 29 + b -3 + a 20 20 0.4 0.6 Probabilities
