Week2 Essay

699 Words Aug 3rd, 2014 3 Pages
[pic] Department of Management
Class of BUS 564 Advanced Decision Making Final Exam

1- A local real estate investor in Orlando is considering three alternative investments: a motel, a restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourists; profits from the theater will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment:
| |Gasoline Availability |
|Investment |Shortage |Stable Supply |Surplus |
|Motel |$ 6,000 |$10,000 |$20,000 |
|Restaurant |2,000 |15,000 |6,000 |
|Theater
…show more content…
Following is the annual profit from the wine produced from each grower's grapes for each percentage defective:

Use decision tree analysis to determine from which grower the company should purchase grapes.

3- The Loebuck Grocery must decide how many cases of milk to stock each week to meet demand. The probability distribution of demand during a week is shown in the following table:
|Demand (cases) |Probability |
|15 |.20 |
|16 |.25 |
|17 |.40 |
|18 |.15 |
| |1.00 |

Each case costs the grocer $ 8 and sells for $12. Unsold cases are sold to a local farmer (who mixes the milk with feed for livestock) for $2 per case. If there is a shortage, the grocer considers the cost of customer ill will and lost profit to be $4 per case. The grocer must decide how many cases of milk to

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