Quantitative Analysis for Management, 13/e

Solved Problems

1. Solved Problem 3-1 Maria Rojas is considering the possibility of opening a small dress shop on Fairbanks Avenue, a few blocks from the university. She has located a good mall that attracts students. Her options are to open a small shop, a medium-sized shop, or no shop at all. The market for a dress shop can be good, average, or bad. The probabilities for these three possibilities are 0.2 for a good market, 0.5 for an average market, and 0.3 for a bad market. The net profit or loss figures for the medium-sized and small shops for the various market conditions are given in the following table. Building no shop at all yields no loss and no gain.

   1. What do you recommend?

   2. Calculate the EVPI.

   3. Develop the opportunity loss table for ...