A country has two airfields with installations worth$2,000,000 and $10,000,000, respectively, of which it candefend only one against an attack by its enemy. Theenemy, on the other hand, can attack only one of these airfields and take it successfully only if it is left unde-fended. Considering the “payoff” to the country to be the total value of the installations it holds after the attack,find the optimum strategy of the country as well as thatof its enemy and the value of the “game.”

A country has two airfields with installations worth$2,000,000 and $10,000,000, respectively, of which it candefend only one against an attack by its enemy. Theenemy, on the other hand, can attack only one of these airfields and take it successfully only if it is left unde-fended. Considering the “payoff” to the country to be the total value of the installations it holds after the attack,find the optimum strategy of the country as well as thatof its enemy and the value of the “game.”

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 32P

See similar textbooks

Similar questions

Phillip Witt, president of Witt Input Devices, wishes to create a portfolio of local suppliers for his new line of keyboards. Suppose that Phillip is willing to use one local supplier and up to two more located in other territories within the country. This would reduce the probability of a "super-event" that might shut down all suppliers at the same time at least 2 weeks to 0.5%, but due to increased distance the annual costs for managing each of the distant suppliers would be $25,000 (still $15 comma 000 for the local supplier). A total shutdown would cost the company approximately $400,000. He estimates the "unique-event" risk for any of the suppliers to be 5%. Assuming that the local supplier would be the first one chosen, how many suppliers should Witt Input Devices use? Find the EMV for alternatives using 1, 2, or 3 suppliers. EMV(1)equals=$ (Enter your response rounded to the nearest wholenumber.) EMV(2)equals=$ (Enter your response rounded to the nearest…
Cheryl Druehl Retailers, Inc., must decide whether to build a small or a large facility at a new location in Fairfax. Demand at the location will either be low or high, with probabilities 0.3 and 0.7, respectively. If Cheryl builds a small facility and demand proves to be high, she then has the option of expanding the facility. If a small facility is built and demand proves to be high, and then the retailer expands the facility, the payoff is $290,000. If a small facility is built and demand proves to be high, but Cheryl then decides not to expand the facility, the payoff is $253,000. If a small facility is built and demand proves to be low, then there is no option to expand and the payoff is $220,000. If a large facility is built and demand proves to be low, Cheryl then has the option of stimulating demand through local advertising. If she does not exercise this option, then the payoff is $45,000. If she does exercise the advertising option, then the response to…
Johnson Chemicals is considering two options for itssupplier portfolio. Option I uses two local suppliers. Each hasa " unique-event" risk of 5%, and the probability of a " superevent"that would disable both at the same time is estimated to be1.5%. Option 2 uses two suppliers located in different countries.Each has a "unique-event" risk of 13%, and the probability of a"super-event" that would disable both at the same time is estimatedto be 0.2%.a) What is the probability that both suppliers will be disrupted using option I?b) What is the probability that both suppliers will be disrupted using option 2?c) Which option would provide the lowest risk of a total shutdown?
Cheryl Druehl Retailers, Inc., must decide whether to build a small or a large facility at a new location in Fairfax. Demand at the location will either be low or high, with probabilities 0.3 and 0.7, respectively. If Cheryl builds a small facility and demand proves to be high, she then has the option of expanding the facility. If a small facility is built and demand proves to be high, and then the retailer expands the facility, the payoff is $240,000. If a small facility is built and demand proves to be high, but Cheryl then decides not to expand the facility, the payoff is $213,000. If a small facility is built and demand proves to be low, then there is no option to expand and the payoff is $230,000. If a large facility is built and demand proves to be low, Cheryl then has the option of stimulating demand through local advertising. If she does not exercise this option, then the payoff is $60,000. If she does exercise the advertising option, then the response to advertising will…
Timothy is retiring from his job soon at which time his employer will make the following offer: 1. A lumpsum amount of $200,000 2. A sum of $15,000 at the beginning of each year for the next 25 years. If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose?
Cheryl Druehl Retailers, Inc., must decide whether to build a small or a large facility at a new location in Fairfax. Demand at the location will either be low or high, with probabilities 0.3 and 0.7,respectively. If Cheryl builds a small facility and demand proves to be high, she then has the option of expanding the facility. If a small facility is built and demand proves to be high, and then the retailer expands the facility, the payoff is $230,000. If a small facility is built and demand proves to be high, but Cheryl then decides not to expand the facility, the payoff is $203,000. If a small facility is built and demand proves to be low, then there is no option to expand and the payoff is $250,000. If a large facility is built and demand proves to be low, Cheryl then has the option of stimulating demand through local advertising. If she does not exercise this option, then the payoff is $40,000. If she does exercise the advertising option, then the response to…
Cheryl Druehl Retailers, Inc., must decide whether to build a small or a large facility at a new location in Fairfax. Demand at the location will either be low or high, with probabilities 0.6 and 0.4, respectively. If Cheryl builds a small facility and demand proves to be high, she then has the option of expanding the facility. If a small facility is built and demand proves to be high, and then the retailer expands the facility, the payoff is $290,000. If a small facility is built and demand proves to be high, but Cheryl then decides not to expand the facility, the payoff is $253,000. If a small facility is built and demand proves to be low, then there is no option to expand and the payoff is $220,000. If a large facility is built and demand proves to be low, Cheryl then has the option of stimulating demand through local advertising. If she does not exercise this option, then the payoff is $35,000. If she does exercise the advertising option, then the response to advertising will…
Machado Construction is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a "unique-event" risk of 8%, and the probability of a "super-even" that would disable both at the same time is estimated to be 2.5%. Option 2 uses two suppliers located in different countries. Each has a "unique-event" risk of 18%, and the probability of a "super-event" that would disable both at the same time is estimated to be 1.2%. (a) What is the probability that both suppliers will be disrupted using option 1? (b) What is the probability that both suppliers will be disrupted using option 2? (c) Which option would provide the lowest risk of a total shutdown?
A company intends to install a power saving machine and have option of buying or leasing. The company can obtain a loan at 14% payable in five equal instalments of K178,858 each, at the beginning of the year. In case of leasing, the company would require to pay an annual end of year rent of 25% of the cost of machine for 5 years. The company is in 40% tax bracket. The salvage value is estimated at K24,998 at the end of 5 years assuming straight line depreciation. Evaluate the two alternatives and advise the company by considering after tax cost of debt concept for both alternatives.
Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a "unique-event" risk of 5%, and the probability of a "superevent" that would disable both at the same time is estimated to be 1.5%. Option 2 uses two suppliers located in different countries. Each has a "unique-event" risk of 13%, and the probability of a "super-event" that would disable both at the same time is estimated to be 0.2%.
Johnson Chemicals is considering two options for itssupplier portfolio. Option 1 uses two local suppliers. Each has a “unique-event” risk of 5%, and the probability of a “super-event” that would disable both at the same time is estimated to be 1.5%. Option 2 uses two suppliers located in different countries.Each has a “unique-event” risk of 13%, and the probability of a “super-event” that would disable both at the same time is esti-mated to be 0.2%. a) What is the probability that both suppliers will be disruptedusing option 1?b) What is the probability that both suppliers will be disruptedusing option 2?c) Which option would provide the lowest risk of a total shutdown?
Johnson Chemicals is considering two options for its supplier portfolio. Option 1 uses two local suppliers. Each has a “unique-event” risk of 5%, and the probability of a “superevent” that would disable both at the same time is estimated to be 1.5%. Option 2 uses two suppliers located in different countries. Each has a “unique-event” risk of 13%, and the probability of a“super-event” that would disable both at the same time is estimatedto be 0.2%. a) What is the probability that both suppliers will be disruptedusing option 1?b) What is the probability that both suppliers will be disruptedusing option 2?c) Which option would provide the lowest risk of a total shutdown?