Exam 24: Decision Making and Risk

A company is considering three alternatives to deal with extra work load (in $100,000) as shown below.If the likelihoods of easy, moderately difficult and extremely difficult are 0.2, 0.4 and 0.4, respectively, what is the expected value (in $100,000) with perfect information?

A company is considering three alternatives to deal with extra work load as shown below (in $100,000).If the likelihoods of easy, moderately difficult and extremely difficult are 0.2, 0.4 and 0.4, respectively, the standard deviation in costs associated with outsourcing is ________________________ .

A company is considering three alternatives (action) to deal with this extra work load as shown below (in $100,000).Using the minimin approach, the company should ________________________ .

A company believes there is a 20% chance the file modifications will be easy, a 40% chance that they will be moderately difficult and a 40% that they will be extremely difficult.Based on old files, modifications will be extensive or minor.Suppose the probabilities are as follows: P (Minor | Easy) = 0.80, P (Minor | Moderately Difficult) = 0)50 and P (Minor | Extremely Difficult) = 0.20.What is the probability that the difficulty of the file modifications and transfer will be extremely difficult given that the consultant believes the modifications required are extensive?

A company believes there is a 20% chance the file modifications will be easy, a 40% chance that they will be moderately difficult and a 40% that they will be extremely difficult.Based on old files, modifications will be extensive or minor.Suppose the probabilities are as follows: P (Minor | Easy) = 0.80, P (Minor | Moderately Difficult) = 0)50 and P (Minor | Extremely Difficult) = 0.20.What is the probability that the difficulty of the file modifications and transfer will be extremely difficult given that the modifications required are minor?

24.4 The Expected Value of an Action.Using the payoff table ($ million) is shown below, if the probabilities for future mortgage interest rates going up, staying about the same, and going down are .35, .50 and .15, respectively, what is the expected value for building an active retirement community?

Using the payoff table ($ million) is shown below, if the probabilities for future mortgage interest rates going up, staying about the same, and going down are 0.35, 0.50 and 0.15, respectively, the expected value with perfect information is ________________________ .

A company is considering three alternatives (action) to deal with this extra work load as shown below (in $100,000).If the likelihoods of easy, moderately difficult and extremely difficult are 0.2, 0.4 and 0.4, respectively, the best decision according to the expected value approach is to ________________________ .

A company believes there is a 20% chance the file modifications will be easy, a 40% chance that they will be moderately difficult and a 40% that they will be extremely difficult.Based on old files, modifications will be extensive or minor.Suppose the probabilities are as follows: P (Minor | Easy) = 0.80, P (Minor | Moderately Difficult) = 0)50 and P (Minor | Extremely Difficult) = 0.20.What is the probability that the difficulty of the file modifications and transfer will be extremely difficult given that the modifications required are minor?

Using the payoff table ($ million) is shown below for two possible actions, if the probabilities for future mortgage interest rates going up, staying about the same, and going down are 0.35, 0.50 and 0.15, respectively, the best decision according to the expected value approach is to build ________________________ .

24.7 Estimating Variation.A farm owner has three possible hiring decisions.His profits depend on the growing season as shown below.If the probability of a good growing season is 0.75.The standard deviation in payoffs for hiring migrant workers is ________________________ .

A farm owner has three possible hiring decisions.His profits depend on the growing season as shown below.If the probability of a good growing season is 0.75.What is the expected value of hiring teenagers?

A company is considering three alternatives to deal with extra work load as shown below (in $100,000).If the likelihoods of easy, moderately difficult and extremely difficult are 0.2, 0.4 and 0.4, respectively, the expected cost of hiring temporary staff is ________________________ .

A farm owner could hire either migrant workers or local teenagers who need summer employment.His profits depend on the growing season as shown below.Using the maximax approach, the farmer would ________________________ .

A farm owner has three possible hiring decisions.His profits depend on the growing season as shown below.If the probability of a good growing season is 0.75.Based on the expected value approach, the farmer should ________________________ .

A company is considering three alternatives (action) to deal with this extra work load as shown below (in $100,000).Using the minimin approach, the company should ________________________ .

A land owner is considering two actions and mortgage interest rates will affect his outcomes.The payoff table ($ million) is shown below.According to the maximin approach, the land owner should build ________________________ .

A farm owner has three possible hiring decisions.His profits depend on the growing season as shown below.If the probability of a good growing season is 0.75.If the farmer is risk averse, he would ________________________ .

A farm owner has three possible hiring decisions.His profits depend on the growing season as shown below.If the probability of a good growing season is 0.75.The return to risk ratio for hiring migrant workers is ________________________ .