Marcia owns a coffee shop on Main Street. She is contemplating the future of her current coffee shop. She is considering

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Marcia Owns A Coffee Shop On Main Street She Is Contemplating The Future Of Her Current Coffee Shop She Is Considering 1 (234.59 KiB) Viewed 51 times

Marcia Owns A Coffee Shop On Main Street She Is Contemplating The Future Of Her Current Coffee Shop She Is Considering 2 (170.05 KiB) Viewed 51 times

Marcia owns a coffee shop on Main Street. She is contemplating the future of her current coffee shop. She is considering seven alternative decisions: (1) sell her business and leave the coffee industry, (2) sell her current shop and open a coffee cart on College Hill, (3) maihtain her current business (i.e., status quo), (4) expand hours at her current shop, (5) expand hours and retail area at her current location, (6) open up a second shop near HWY 20, and (7) relocate to a larger retail space on University Avenue Marica's expected profit will depend on the future demand for her coffee. Her expected payoffs are as follows: Future demand for Marcia's Coffee Very High High Moderate Low Very Low S1 S2 S3 S4 S5 -1500 -800 0 1800 1500 -300 400 1200 1200 1550 750 900 400 300 0 1200 1600 1100 0 -400 Sell shop & leave industry Di Sell shop & open cart D2 Status quo D3 Expand hours D4 Expand hours and retail area D5 Open second shop D6 Relocate to University Avenue D7 1850 1400 1200 500 -800 2500 1300 1100 -500 -1000 3000 1800 1000 -1200 -3000 Use Excel to answer the following questions. You must use Excel functions to find the solutions (as demonstrated in the in-class example) to receive full credit. Note: only Excel files will be accepted, not Google Sheets. Clearly label in your Excel file where your answers are. a. Identify Marcia's optimal decision alternative under each of the four approaches of decision making without probability.

-300 400 1200 1200 1550 900 750 400 300 0 1600 Sell shop & open cart D2 Status quo D3 Expand hours D4 Expand hours and retail area D5 Open second shop Do Relocate to University Avenue D, 1200 1100 0 -400 1850 1400 1200 500 -800 2500 1300 1100 -500 -1000 3000 1800 1000 -1200 -3000 Use Excel to answer the following questions. You must use Excel functions to find the solutions (as demonstrated in the in-class example) to receive full credit. Note: only Excel files will be accepted, not Google Sheets. Clearly label in your Excel file where your answers are. a. Identify Marcia's optimal decision alternative under each of the four approaches of decision making without probability. b. Suppose Marcia has the following probabilities regarding future demand: P(S1) = 0.20, P(S2) = 0.20, P(S3) = 0.15, P(S4) = 0.25 What is her optimal decision alternative using the Expected Value approach? C. What is Marcia's EVPI? d. If instead, Marcia believes: P(S1) = 0.30, P(S2) = 0.20, P(S3) = 0.10, P(S4) = 0.25, what is her optimal decision alternative using the Expected Value approach and the corresponding EVPI?