Solutions Operations management

Market analysts at Cranberry Construction Contractors are deciding among eight competing business pl

Question: Market analysts at Cranberry Construction Contractors are deciding among eight competing business plans $\left( i.e.,{{d}_{1}},{{d}_{2}},{{d}_{3}},{{d}_{4}},{{d}_{5}} \right)$ regarding how they intend to grow their business, given the uncertainties of the home building market. They are considering five scenarios for the current economic climate: significantly faster growth $\left( {{s}_{1}} \right)$, modestly faster growth $\left( {{s}_{2}} \right)$, stagnation or no change $\left( {{s}_{3}} \right)$, modestly slower growth $\left( {{s}_{4}} \right)$, and significantly slower growth $\left( {{s}_{5}} \right)$. The following matrix represents the anticipated profits, in thousands of dollars monthly, corresponding to each decision, based upon which economic climate exists:

	\[{{s}_{1}}\]	\[{{s}_{2}}\]	\[{{s}_{3}}\]	\[{{s}_{4}}\]	\[{{s}_{5}}\]
\[{{d}_{1}}\]	120	100	75	15	-10
\[{{d}_{2}}\]	90	125	80	10	0
\[{{d}_{3}}\]	45	90	90	25	5
\[{{d}_{4}}\]	30	80	50	-20	10
\[{{d}_{5}}\]	15	75	40	-40	15
\[{{d}_{6}}\]	0	60	15	-80	10
\[{{d}_{7}}\]	-60	10	-20	-120	15
\[{{d}_{8}}\]	-180	-25	-40	-160	25

Answer the following questions: (a) Based upon the five decision-making criteria with uncertainty, which business plan seems most reasonable given all the possible economic climates in order to maximize profit? [COMMENTS & HINTS: Use a criterion of realism of 20% when appropriate. Do not ignore the default decision alternative for doing nothing at all.] (b) Based upon the expected monetary value (EMV) of each of the decision alternatives, which business plan seems most reasonable in order to maximize profit?

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