A manufacturer makes custom tee shirts for rock groups. The manufacturer makes a profit of $15 per tee shirt. The fixed costs of building a large facility are $100,000 and the fixed costs of building a small facility are $60,000. The production levels for the large facility are 5,000, 10,000, 20,000 and 30,000; the small facility can only produce up to 20,000 level.

The probabilities associated with the different levels of production are .15, .25, .4, & .2 respectively.

a. Compute the payoffs based on this data.

b. Construct a Payoff Table.

c. Construct an Opportunity Loss Table.

d. Construct an Expected Monetary Value Table.

e. Construct an Expected Opportunity Loss Table (You must construct the chart) f. What is the value of Perfect Information? (You must show calculations)

The Clinton Street Garden & Nursery sells Christmas trees for $40.00. It buys these trees for $10.00. Trees that the Clinton Street Garden & Nursery cannot sell to the public, it can sell to a company that makes wood chips at $3.00 a tree. The Clinton Street Garden & Nursery estimates that four levels of demand are possible: 100, 200, 500, and 800 trees. It can buy the trees at these same levels.

a. Compute the payoffs based on this data.

b. Construct a Payoff Table.

c. Construct an Opportunity Loss Table.

d. Construct an Expected Monetary Value Table.

e. Construct an Expected Opportunity Loss Table (You must construct the chart) f. What is the value of Perfect Information? (You must show calculations)

Subject | Mathematics |

Due By (Pacific Time) | 07/20/2013 05:00 pm |

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