Myrtle Air Express decided to offer direct service fromCleveland to Myrtle Beach. Management must decide...

Myrtle Air Express decided to offer direct service from Cleveland to Myrtle Beach. Management must decide between a full-price service using the company’s new fleet of jet aircraft and a discount service using smaller capacity commuter planes. It is clear that the best choice depends on the market reaction to the service Myrtle Air offers. Management developed estimates of the contribution to profit for each type of service based upon two possible levels of demand for service to Myrtle Beach: strong and weak. The following table shows the estimated quarterly profits (in thousands of dollars):

Demand for Service Service

Service Strong Service Weak

Full Price $960 -$490
Discount $670 $320

How many decision alternatives are there?

Number of decision alternatives =

How many outcomes are there for the chance event?

Number of outcomes =

Use graphical sensitivity analysis to determine the range of demand probabilities for which each of the decision alternatives has the largest expected value. If required, round your answer to four decimal places.

Discount service if probability of strong demand is less than or equal to

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Expert Solution

jeff jeffy answered 2 years ago

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