Operations manager

     At Acme Home   Products, Inc. the operations manager’s staff has developed information for   four manufacturing process, refereed to as T, R, Q, P. These process   alternatives vary by production technology and the capacity of the machinery   used. All choices enable the same level of total production, and the machinery used has the same lifetime. The four states of nature represent four levels of consumer acceptance of the firm’s products.

Management has estimated the dollar value associated with each state of nature in the table below. the dollar amounts are net present value of future profits in millions of dollars. Show all required calculations needed in developing your responses. States Of Nature 1 2 3 4 Process T 40 75   60 160 Process R 30 50 80 70 Procdess Q 70 155 70 50 Process P -160 20 150   145    

     a) Assuming a   maximax strategy, which alternative would be chosen?     

     b) If maximin   strategy were used, which would be chosen?     

     c) If the states of   nature were equally likely, which alternative should be chosen?     

     d) If the   Operations Manager was a very optimistic person, what alternative do you   think would most likely be chosen and why?     

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