Sample Question

Topics: Shopping mall, Decision theory, Textbook Pages: 2 (341 words) Published: May 7, 2013
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Question 1
The University of Darwin bookstore stocks textbooks in preparation for sales each semester. It normally relies on departmental forecasts and preregistration records to determine how many copies of the text are needed. Preregistration shows an enrollment of 80 Operations Management students, but Ali the bookstore manager has a second thought. Based on his intuition and some historical evidence, Ali believes that sales may range from 70 to 80 units, according to the following distribution:

Demand| 70| 75| 80|
Probability| 0.20| 0.50| 0.30|

The Operations Management textbook costs the bookstore RM82 each and sells for RM112. Any unsold copies can be returned to the publisher, less a restocking fee and shipping, for a net refund of RM36. a) Fill up the profits table.(5 marks)

Order\demand| 70 copies| 75 copies| 80 copies|
70 copies| | | |
75 copies| | | |
80 copies| | | |
Probability| 0.2| 0.5| 0.3|

b) How many copies should the bookstore stock to achieve the highest profit?(1 marks)

Question 2

Peak Development Sdn Bhd intends to build either a sport car center or a shopping mall on a piece of land in Sepang. The developer also has the option of not to proceed with the project. If the market is favorable, the developer will earn a profit of RM500,000 from the sport center and RM800,000 from the shopping mall. However, with an unfavorable market, the developer would lose RM300,000 with the sport center and RM450,000 with the shopping mall. The probability of favorable market is 0.6. The developer has a choice to obtain additional information from a marketing research firm at the cost of RM100,000. The probability of the favorable given that the survey is positive is 0.85. the probabilility of the favorable given that the survey is negative is 0.32. The probability that the survey will result in a positive market is 0.53.

Construct a decision tree for the above...
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