An Operations Manager's Staff Has Compiled the Information Below for Four

question 11

Essay

An operations manager's staff has compiled the information below for four manufacturing alternatives (A, B, C, and
D) that vary by production technology and the capacity of the machinery. All choices enable the same level of total production and have the same 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.
States of Nature
$$\begin{array} { | l | c | c | c | c | } \hline & 1 & 2 & 3 & 4 \\\hline \text { Alternative A } & 50 & 55 & 60 & 65 \\\hline \text { Alternative B } & 30 & 50 & 80 & 130 \\\hline \text { Alternative C } & 70 & 80 & 70 & 65 \\\hline \text { Alternative D } & - 100 & - 10 & 150 & 220 \\\hline\end{array}$$
a. Assuming a maximax strategy, which alternative would be chosen?
b. If maximin were used, which would be chosen?
c. If the states of nature were equally likely, which alternative should be chosen?

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Definitions:

Reproductive Success

A measure in evolutionary biology indicating the number of offspring an individual or genotype produces and successfully supports to reproductive age.

Social Dominance

A theory suggesting that societies are structured in hierarchies, with certain groups dominating over others.

Evolutionary Psychology

A conceptual strategy in the realms of social and natural sciences, exploring the configuration of the psyche based on recent evolutionary insights.

Individual Differences

Variations among individuals on a variety of psychological and physical characteristics, such as abilities, preferences, and traits.