Airway (a Midwestern department store chain) andCorvett (an Eastern department store chain) are determiningwhether to expand their geographical bases. The only viablemanner by which expansion might be carried out is for achain to open stores in the other’s area. If neither chainexpands, then Airway’s profits will be $3 million andCorvett’s will be $2 million. If Airway expands and Corvettdoes not, then Airway’s profits will be $5 million, andCorvett will lose $2 million. If Airway does not expand andCorvett does, Airway will lose $1 million, and Corvett willearn $4 million. Finally, if both chains expand, Airway willearn $1 million and Corvett will earn $500,000 in profits.Determine the equilibrium points, if any, for this game.
Airway (a Midwestern department store chain) andCorvett (an Eastern department store chain) are determiningwhether to expand their geographical bases. The only viablemanner by which expansion might be carried out is for achain to open stores in the other’s area. If neither chainexpands, then Airway’s profits will be $3 million andCorvett’s will be $2 million. If Airway expands and Corvettdoes not, then Airway’s profits will be $5 million, andCorvett will lose $2 million. If Airway does not expand andCorvett does, Airway will lose $1 million, and Corvett willearn $4 million. Finally, if both chains expand, Airway willearn $1 million and Corvett will earn $500,000 in profits.Determine the equilibrium points, if any, for this game.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Airway (a Midwestern department store chain) and
Corvett (an Eastern department store chain) are determining
whether to expand their geographical bases. The only viable
manner by which expansion might be carried out is for a
chain to open stores in the other’s area. If neither chain
expands, then Airway’s profits will be $3 million and
Corvett’s will be $2 million. If Airway expands and Corvett
does not, then Airway’s profits will be $5 million, and
Corvett will lose $2 million. If Airway does not expand and
Corvett does, Airway will lose $1 million, and Corvett will
earn $4 million. Finally, if both chains expand, Airway will
earn $1 million and Corvett will earn $500,000 in profits.
Determine the equilibrium points, if any, for this game.
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