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Jeff Kaufmann's machine shop sells a variety of machines for job shops. A customer wants to purchase a model XPO2 drilling machine from Jeff's store. The model XPO2 sells for $185,000, but Jeff is out of XPO2S. The customer says he will wait for Jeff to get a model XPO2 in stock. Jeff knows that there is a wholesale market for XPO2S from which he can purchase an XPO2. Jeff can buy an XPO2 today for $150,000, or he can wait a day and buy an XPO2 (if one is available) tomorrow for $130,000. If at least one XPO2 is still available tomorrow, Jeff can wait until the day after tomorrow and buy an XPO2 (f one is still available) for $110,000. There is a 0.50 probability that there will be no model XPO25 available tomorrow. If there are model XPO25 available tomorrow, there is a 0.75 probability that by the day after tomorrow, there will be no model XPO25 available in the wholesale market. Three days from now, it is certain that no model XPO25 will be available on the wholesale market. What is the maximum expected profit that Jeff can achieve? What should Jeff do? Choose the correct decision tree below. OA. OB. 1 buy now 1 buy now 35,000 35.000 wait 1 day unavailable (0.50) wait 1 day unavailable (0.50) available (0.50) available (0.50) 2 buy now wait 1 day 2 buy now wait 1 day unavalable (0.75) 55,000 55.000 unavailable (0.75) O available (0.25) available (0.25 buy now 75, 000 buy now -75,000 3 wait 1 day 3 wait 1 day Oc. OD. OD. buy now buy now 1 1 35,000 wait 1 day unavailable (0.75) wait 1 day unavailable (0.75) available (0.25) available (0.25) 2 buy now wait 1 day unavailable (0.50) 2 buy now 2 wait 1 day 55,000 55,000 Ounavailable (0.50) available (0.50 available (0.50) buy now buy now 3 75.000 75,000 3 wait 1 day 3 wait 1 day Thus, Jeff should The expected payoff is $ (round your response to the nearest dollar).

Jeff Kaufmann's machine shop sells a variety of machines for job shops. A customer wants to purchase a model XPO2 drilling machine from Jeff's store. The model XPO2 sells for $185,000, but Jeff is out of XPO2S. The customer says he will wait for Jeff to get a model XPO2 in stock. Jeff knows that there is a wholesale market for XPO2S from which he can purchase an XPO2. Jeff can buy an XPO2 today for $150,000, or he can wait a day and buy an XPO2 (if one is available) tomorrow for $130,000. If at least one XPO2 is still available tomorrow, Jeff can wait until the day after tomorrow and buy an XPO2 (f one is still available) for $110,000. There is a 0.50 probability that there will be no model XPO25 available tomorrow. If there are model XPO25 available tomorrow, there is a 0.75 probability that by the day after tomorrow, there will be no model XPO25 available in the wholesale market. Three days from now, it is certain that no model XPO25 will be available on the wholesale market. What is the maximum expected profit that Jeff can achieve? What should Jeff do? Choose the correct decision tree below. OA. OB. 1 buy now 1 buy now 35,000 35.000 wait 1 day unavailable (0.50) wait 1 day unavailable (0.50) available (0.50) available (0.50) 2 buy now wait 1 day 2 buy now wait 1 day unavalable (0.75) 55,000 55.000 unavailable (0.75) O available (0.25) available (0.25 buy now 75, 000 buy now -75,000 3 wait 1 day 3 wait 1 day Oc. OD. OD. buy now buy now 1 1 35,000 wait 1 day unavailable (0.75) wait 1 day unavailable (0.75) available (0.25) available (0.25) 2 buy now wait 1 day unavailable (0.50) 2 buy now 2 wait 1 day 55,000 55,000 Ounavailable (0.50) available (0.50 available (0.50) buy now buy now 3 75.000 75,000 3 wait 1 day 3 wait 1 day Thus, Jeff should The expected payoff is $ (round your response to the nearest dollar).

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...
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Jeff Kaufmann's machine shop sells a variety of machines for job shops. A customer wants to purchase a model XPO2 drilling machine from Jeff's store. The model XPO2 sells for $185,000, but Jeff is out of XPO2S. The customer says he will wait for Jeff to get a model XPO2 in stock. Jeff knows that there is a wholesale market for XPO2S from which he can purchase an XPO2. Jeff can buy an XPO2 today for $150,000, or he can wait a day and buy an XPO2 (if one is available) tomorrow for $130,000. If at least one XPO2 is still available tomorrow, Jeff can wait until the day after tomorrow and buy an XPO2 (if one is still available) for $110,000. There is a 0.50 probability that there will be no model XPO2S available tomorrow. If there are model XPO2S available tomorrow, there is a 0.75 probability that by the day after tomorrow, there will be no model XPO2S available in the wholesale market. Three days from now, it is certain that no model XPO2S will be available on the wholesale market. What is the maximum expected profit that Jeff can achieve? What should Jeff do? Choose the correct decision tree below. O A. O B. buy now 1 35,000 buy now 1 35,000 wait 1 day unavailable (0.50) wait 1 day unavailable (0.50) available (0.50) available (0.50) buy now 2 55,000 buy now 55,000 wait 1 day wait 1 day unavailable (0.75) unavailable (0.75) available (0.25) buy now available (0.25) buy now 75,000 75,000 3 wait 1 day 3 wait 1 day OC. D. buy now buy now 1 35,000 wait 1 day unavailable (0.75) wait 1 day unavailable (0.75) available (0.25) available (0.25) buy now 2 55,000 buy now 2 55,000 wait 1 day wait 1 day unavailable (0.50) unavailable (0.50) available (0.50) buy now available (0.50) buy now 75,000 75,000 3 wait 1 day 3 wait 1 day Thus, Jeff should The expected payoff is $ (round your response to the nearest dollar).
Transcribed Image Text:Jeff Kaufmann's machine shop sells a variety of machines for job shops. A customer wants to purchase a model XPO2 drilling machine from Jeff's store. The model XPO2 sells for $185,000, but Jeff is out of XPO2S. The customer says he will wait for Jeff to get a model XPO2 in stock. Jeff knows that there is a wholesale market for XPO2S from which he can purchase an XPO2. Jeff can buy an XPO2 today for $150,000, or he can wait a day and buy an XPO2 (if one is available) tomorrow for $130,000. If at least one XPO2 is still available tomorrow, Jeff can wait until the day after tomorrow and buy an XPO2 (if one is still available) for $110,000. There is a 0.50 probability that there will be no model XPO2S available tomorrow. If there are model XPO2S available tomorrow, there is a 0.75 probability that by the day after tomorrow, there will be no model XPO2S available in the wholesale market. Three days from now, it is certain that no model XPO2S will be available on the wholesale market. What is the maximum expected profit that Jeff can achieve? What should Jeff do? Choose the correct decision tree below. O A. O B. buy now 1 35,000 buy now 1 35,000 wait 1 day unavailable (0.50) wait 1 day unavailable (0.50) available (0.50) available (0.50) buy now 2 55,000 buy now 55,000 wait 1 day wait 1 day unavailable (0.75) unavailable (0.75) available (0.25) buy now available (0.25) buy now 75,000 75,000 3 wait 1 day 3 wait 1 day OC. D. buy now buy now 1 35,000 wait 1 day unavailable (0.75) wait 1 day unavailable (0.75) available (0.25) available (0.25) buy now 2 55,000 buy now 2 55,000 wait 1 day wait 1 day unavailable (0.50) unavailable (0.50) available (0.50) buy now available (0.50) buy now 75,000 75,000 3 wait 1 day 3 wait 1 day Thus, Jeff should The expected payoff is $ (round your response to the nearest dollar).
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