Due Date: 11:59 p.m. EST, Sunday of Unit 7
Points: 100
Overview:
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
Be sure to read the criteria by which your work will be evaluated before you start
and again after before you submit.
BUS522 – Financial Tools for
Managers
Steve’s Mountain Bicycle Shop
Evaluation Rubric for Steve’s Mountain Bicycle Shop Assignment
CRITERIA Deficient Needs
Improvement
Proficient Exemplary
(0-35 Points) (36-47 Points) (48-59 Points) (60 Points)
Maximax/Maxim
in/Equally
Likely/Minimax
Missing, or
incomplete.
Complete but
showing
inaccurate
data.
Complete and
showing all or
mostly correct.
All data correct,
formatting has
been applied to
outputs.
(0-11 Points) (12-15 Points) (16-19 Points) (20 Points)
Criterion of
Realism
Missing, or
incomplete.
Complete but
showing
inaccurate
data.
Complete and
showing all or
mostly correct.
All data correct,
formatting has
been applied to
outputs.
Presentation Formatting
not applied,
output
unclear.
Formatting
applied but
output is
unclear and
unorganized.
Clearly
presented,
answers to
Steve’s
questions
clearly
identifiable.
All data is
clearly laid out
and presented
in a publish
quality format.