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DeVry BSOP 209 Week 6 Quiz

1. (TCO 14) Briefly discuss the decision methods used when there is complete uncertainty as to which state in a decision environment may occur. (Points : 10)

2. (TCOs 10,11 and 12) Chad’s Pottery Barn has enough clay to make 24 small vases or 6 large vases. He has only enough of a special glazing compound to glaze 16 of the small vases or 8 of the large vases. Let X1 = the number of small vases and X2 = the number of large vases.

The smaller vases sell for $3 each, and the larger vases would bring $9 each.

a. Formulate the problem.

b. Solve the problem. (Points : 30)

3. (TCO 13, 14) XYZ coating company has reviewed four new processes for improving their coating line. The four processes, labeled A, B, C, and D use different technology and have different capacities. All the processes have the same level of production and the lifetime.

The four states of nature represent four levels of consumer acceptance of the firm’s products. Values in the table are net present value of future profits in millions of dollars.

Forecasts indicate that there is a 0.2 probability of acceptance level 1, 0.1 chance of acceptance level 2, 0.4 chance of acceptance level 3, and 0.3 change of acceptance level 4.

Using the criterion of expected monetary value, which production alternative should be chosen? (Points : 30)

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