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

question 52

Essay

An operations manager's staff has compiled the information below for four manufacturing alternatives (E,F,G,and H)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.Forecasts indicate that there is a 0.1 probability of acceptance level 1,0.2 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?

---

Definitions:

Least Squares

Least squares is a mathematical method used to find the best-fitting line or curve to a set of points by minimizing the sum of the squares of the differences between the observed and estimated values.

Squared Vertical Distances

The square of the vertical distance from each data point to a line (often in the context of regression analysis), used to measure deviation or error.

Regression Analysis

A statistical method for examining the relationship between a dependent variable and one or more independent variables.

Average Attendance

The mean number of individuals present at a series of events or over a period of time.