12 Task Performance 1

This document contains two problems involving expected value calculations and decision making under uncertainty. [1] For the first problem, the expected values for two new pizza variants must be calculated and the more profitable option chosen. [2] The second problem involves analyzing the optimal supply level for a computer keyboard manufacturer given uncertain demand and profits under different supply scenarios. [3] Decision criteria like maximax, maximin, minimax regret, and equal probability must be applied to determine the best supply level.

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12 Task Performance 1

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Marco Aboy

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BM1704

Name: Date:
Section: Score:

I. PROBLEM SOLVING. Compute for what is asked in the following items. Answers must be rounded up
to two (2) decimal points. (50 points)

1. The Yellow Cab Pizza wants to launch a new pizza variant next month. After deliberations with
their research department, marketing, finance and operations, they have broken down the
possible variants into two (2) options: the Neapolitan and Chicago Deep Dish. The table below
shows the possible profits (expressed in millions) for each option and the corresponding
probabilities:

Neapolitan Chicago deep dish

Profit (𝑥𝑥𝑖𝑖 ) Probability (𝑃𝑃𝑖𝑖 ) 𝑃𝑃𝑖𝑖 𝑥𝑥𝑖𝑖 Profit (𝑥𝑥𝑖𝑖 ) Probability (𝑃𝑃𝑖𝑖 ) 𝑃𝑃𝑖𝑖 𝑥𝑥𝑖𝑖
35 0.15 35 0.20
45 0.30 45 0.35
50 0.35 50 0.30
60 0.20 60 0.15

• Compute for expected value and decide which variant would help the firm earn more profit.
(2 items x 10 points)

2. Spiritechnologies Inc. specializes in computer keyboards. They are analyzing the advantages and
disadvantages of increasing their supply of products to the Cyberhubs of SM Malls. Below is a
table showing the profits, expressed in thousands, supply and demand table for the firm:

Monthly supply for keyboards

150 300 450
Month demand for 150 𝑃𝑃350 (𝑃𝑃100) (𝑃𝑃300)
keyboards 300 𝑃𝑃100 𝑃𝑃500 𝑃𝑃50
450 (𝑃𝑃50) 𝑃𝑃100 𝑃𝑃700

Use the following decision criteria to choose how much the firm should supply:
• Maximax rule (5 points)
• Maximin rule (5 points)
• Minimax regret criterion (Construct a regret table for this) (10 points)
• Equal probability criterion (10 points)
Rubric: Short Answers (5 point items)
CRITERIA PERFORMANCE INDICATORS POINTS
Content The student used the correct method of decision making. 3
Decision The correct decision was made based on the computation. 2
Total 5
Rubric: Computations (10 point items)
CRITERIA PERFORMANCE INDICATORS POINTS
Computation All computations were done completely and correctly. 6
Decision The correct decision was made based on the computation. 4
Total 10