Gb519 Case Study

Case Study 1

Case Study 2

Stella R. Thompson

Kaplan University

Application 7 2

What decision should Lake Placid make using the expected value approach?

Lake Placid should use the medium center size of the demand scenario Base case information. This center will be more efficient cost wise and the community will get the most for their money in the long run. Using the expected value approach, the base-case is the best for size, because the community will make money off of the center at that size.

Compute the expected value of perfect information. Do you think it would be worth trying to obtain additional information to concerning which scenario is likely to occur?

Worst Case

E= (.2/150 x 400) + (.2/150 x -250) + (.2/150 x -400) + (.2/150 x -150)

E= (30 x 400) + (30 x -250) + (30 x -400) + (30 x -120)

E= (12,000) + (-220) + (-370) + (-90)

Expected Value= $11,320

Base Case

E= (.5/150 x 500) + (.5/150 x 650) + (.5/150 x 580) + (.5/150 x -150)

E= (75 x 500) + (75 x 650) + (75 x 580) + (75 x -75)

E= 37,500 + 48,750 + 43,500 + 0

Expected Value = $129,750

Best Case

E= (.3/150 x 660) + (.3/150 x 800) + (.3/150 x 990) + (.3/150 x -150)

E= (45 x 660) + (45 x 800) + (45 x 990) + (45 x -105)

E= 29,700 + 36,000 + 44,550 + -60,000

Expected Value = $50,250

I think it would be in...