Week 2: Answers to Discussion Questions Problem 1 Page 229

Week 2: Answers to discussion questions

Problem 1 page 229

A. Maximax: Expand [$80 is the highest payoff]

B. Maximin: Do Nothing @ $50 is the best of worst payoffs.

C. Laplace: Do Nothing and Subtract are both $55

D. Mimimax Regret:

E.

Low High Worst

Do Nothing 0 20 20

Expand 30 0 30

Subcontract 10 10 10 [best of worst]

Problem 14 page 356

a. First rank or arrange the number of trips from high to low.

Department Number of trips

2-4 90

1-4 80

3-4 55

2-3 40

From this we can see that departments 2 and 4 have the greatest interdepartmental work flow, so they should be closed, perhaps locations C and B. Next, we can see that the work flows for 1 and 4, 3 and 4 are high. Therefore departments 4 has to be located at a central location (location B), while department 2 is in location C, department 1 is in location A, and department 3 is in location D.

Distance * Number of trips matrix

Department 1 2 3 4

1 ------ (10 x 80) = 800 (20 x 70) = 1400 (80 x 40) = 3200

2 ------- ------- (40 x 60) = 2400 (90 x 40) = 3600

3 --------- --------- -------- (55 x 50) = 2750

4...