BUS522 Unit 7 Assignment Latest 2022 September

BUS522 Financial Tools for Managers

Unit 7 Assignment

Steve’s Mountain Bicycle Shop

Steve’s Mountain Bicycle Shop is considering three options for its facility next year. Steve can expand his current shop, move to a larger facility, or make no change. With a good market, the annual payoff would be $76,000 if he expands, $90,000 if he moves, and $40,000 if he does nothing. With an average market, his payoffs will be $30,000,

$41,000, and $15,000, respectively. With a poor market, his payoff will be –$17,000, –

$28,000, and $4,000, respectively. This assignment will explore Maximax, Minimax, and Maximin using this scenario for Steve’s Mountain Bicycle Shop.

Instructions:

•             Create an Excel Document that shows which options Steve should pick in each of the below situations:

o             Maximax,

o             Maximin,

o             Equally likely,

o             Option if Steve uses criterion of realism at α = 0.4 (Hurwicz),

o             Minimax

•             The table(s) should be clearly presented and labeled. It should include information on the possible outcomes as well as the best choice in each of the above listed.

•             You may be creative in the presentation, so test your formatting skills!

Requirements:

•             Microsoft Excel file