Bus 640 Week 2

Suburban Los Angeles Restaurant

The way to approach this problem is to weigh the utility rankings Patricia has assigned to the three major attributes that she considers important in her choice: taste, location, and price. Utilities are explained in our book as, “the psychological satisfaction people expect to receive from doing something.” (Douglas, 2012) Once the utility ranking are calculate then the best restaurant to open can be chosen.

a.    The following chart indicates the utility scores on the three attributes, along with the relevant weights for the suburban area of Los Angeles for both the steak and pizza restaurants.

The calculations for the weights were determined based on the importance Patricia placed on each attribute. The scenario states, “If she opens a restaurant in a suburban area of Los Angeles, then taste is the most important attribute, three times as important as location, and two times as important as price”. Therefore, location was given a number, but the taste must equal three times the amount in the location. Moreover, since the location was given the number one, three times that amount would be three; which was place as the weight for taste. Additionally, the weight for price was calculated in the same fashion, the only difference is that the number had to reflect two times as much. Therefore, you must divide the 3 in half to obtain 1.5; which if you wanted to check you math; would equal to 3, indicating that it was two times the amount of the price. In order to calculate the total expected utility, you must multiply each attribute by its weight and add all of the sums of each to get your total expected utility for each restaurant based on the attributes for the suburban area; concluding that the best restaurant to open would be the Steak Restaurant.

Metropolitan Los Angeles Restaurant

The way to approach this problem is to weigh the utility rankings Patricia has assigned to three major attributes that she considers...