1- Even though independent gasoline stations have been having a difficult time, Susan Solomon has been thinking about starting her own independent gasoline station. Susan’s problem is to decide how large her station should be. The annual returns will depend on both the size of her station and a number of marketing factors related to the oil industry and the demand for gasoline. After a careful analysis, Susan predicted that if the market is good, fair and poor, then profits ($) for the small, medium and large sized stations would be the following respectively: 50000, 20000, -10000; 80000, 30000, -20000; 100000, 30000, -40000.
(a) Develop a decision table for this decision;
(b) What is the maximum decision?
(c) What is the maximin decision?
(d) What is the equally likely decision?
(e) What is the criterion of realism decision? Use an αvalue of 0.9.
(f) Develop an opportunity loss table;
(g) What is the minimax decision?
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2- Sales (in 1000’s) of industrial vacuum cleaners at R. Lowenthal Supply Co. over past 13 months are as follows: 11,14,16,10,15,17,11,14,17,12,14,15,12 for September, October, November, December, January, February, March, April, May, June, July,
August, September.
(a) Using a moving average with three months, determine the demand for vacuum cleaners for next October.
(b) Using a weighted moving average with three periods, determine the demand for vacuum cleaners for October. Use 3, 2, 1 for the weights of the most recent, second most recent and third most recent periods, respectively.
(c) Evaluate the accuracy of each of these methods
(d) What other factors might R. Lowenthal consider in forecasting sales?
(a) Develop a decision table for this decision;
(b) What is the maximum decision?
(c) What is the maximin decision?
(d) What is the equally likely decision?
(e) What is the criterion of realism decision? Use an αvalue of 0.9.
(f) Develop an opportunity loss table;
(g) What is the minimax decision?
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2- Sales (in 1000’s) of industrial vacuum cleaners at R. Lowenthal Supply Co. over past 13 months are as follows: 11,14,16,10,15,17,11,14,17,12,14,15,12 for September, October, November, December, January, February, March, April, May, June, July,
August, September.
(a) Using a moving average with three months, determine the demand for vacuum cleaners for next October.
(b) Using a weighted moving average with three periods, determine the demand for vacuum cleaners for October. Use 3, 2, 1 for the weights of the most recent, second most recent and third most recent periods, respectively.
(c) Evaluate the accuracy of each of these methods
(d) What other factors might R. Lowenthal consider in forecasting sales?