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

question 82

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.
$$\begin{array} { | c | c | c | c | c | } \hline & { \text { States of Nature } } \\\hline & 1 & 2 & 3 & 4 \\\hline \text { Alternative A } & 50 & 55 & 60 & 65 \\\hline \text { Alternative B } & 30 & 50 & 80 & 130 \\\hline \text { Alternative C } & 70 & 80 & 70 & 65 \\\hline \text { Alternative D } & - 100 & - 10 & 150 & 220 \\\hline\end{array}$$
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:

Motor Development

The progression of physical abilities in individuals, including such skills as crawling, walking, and coordination.

Cephalocaudal

Describes the development pattern in humans where growth and motor skills progress from the head downwards through the body.

Proximodistal

Referring to the pattern of development that proceeds from the center of the body outward to the extremities.

Maturational

Relating to the process of maturation or development, often following a natural progression.