Use the following data to answer questions 77-87.
-Refer to the data on Expected Demand for Acme Widgets.Based on the Hurwicz criterion,what is the payoff for the "build capacity" option if you used the coefficient of realism of 0.6?
A)$54.80 million
B)$16.44 million
C)$32.65 million
D)$33.42 million

Question

Use the following data to answer questions 77-87.  
-Refer to the data on Expected Demand for Acme Widgets.Based on the Hurwicz criterion,what is the payoff for the "build capacity" option if you used the coefficient of realism of 0.6?
A)$54.80 million 
B)$16.44 million 
C)$32.65 million 
D)$33.42 million

Quizplus · Accepted Answer

The Hurwicz criterion is a decision-making criterion that takes into account both the potential gain and the potential loss of each option. The coefficient of realism is a weight that is used to determine the relative importance of the potential gain and loss. In this case, the coefficient of realism is 0.6, which means that the potential gain is weighted more heavily than the potential loss.The payoff for the "build capacity" option is $54.80 million. This is calculated by multiplying the potential gain of $80 million by the coefficient of realism of 0.6, and then adding the potential loss of $20 million.

Use the Following Data to Answer Questions 77-87