a) Some members of the practice are pessimists; which location would they choose?
b) There also are very optimistic members in the group; which location would they choose?
c) What would be the Laplace strategy solution for the site?
d) What is the minimax regret solution to this problem?
e) What is the solution for a Hurwitz optimism value of 0.4?
WECARE group practice hired an analyst who estimated the probability for each demand level
at each site as shown in Table 2.
Table 2
f) Using data from Table 1, what is the EMV solution to the site selection?
Figure 1
Average revenues from MDC - 2, MDC - 19, and MDC - 21 are $ 8,885, $ 10,143, and $ 12,711,
respectively.
a) Formulate this as a linear programming problem.
b) Solve the problem using Excel solver.
c) To get the most revenue, which service(s) should be offered?
d) What is the optimal volume(s)?
e) What is the total expected revenue from the new services?
f) Which resources should be expanded?
g) How much additional revenue can be expected if resources are selected in part (f) for
expansion without violating the current solution?
Available
Test Type I II III IV V
Resources
Profi t ($) 8 10 8 7 10
Staff (minutes) 15 15 15 20 25 3,400
Auto analyzer
equipment 20 40 40 60 45 6,000
(minutes)
Materials 12 15 16 14 14 2,700