CSecure httd 5.9 An orange grower in Florida faces a dilemma. The weather foreca
ID: 3601215 • Letter: C
Question
CSecure httd 5.9 An orange grower in Florida faces a dilemma. The weather forecast is for cold weather, and there is a 50% chance that the temperature tonight will be cold enough to freeze and destroy his entire crop, which is worth some $50,000. He can take two pos sible actions to try to alleviate his loss if the temperature drops. First, he could set burners in the orchard; this would cost $5000, but he could still expect to incur dam age of approximately $15,000 to $20,000. Second, he could set up sprinklers to spray the trees. If the temperature drops, the water would freeze on the fruit and provide some insulation. This method is cheaper ($2000), but less effective. With the sprin klers he could expect to incur as much as $25,000 to $30,000 of the loss with no pro- tective action. 210 CHAPTER 5 SENSITIVITY ANALYSIS Compare the grower's expected values for the three alternatives he has, considering the various possible loss scenarios for the burners and the sprinklers. Which alternative would you suggest the grower take? Why? 5.10 An important application of sensitivity analysis occurs in problems involving multiple at- tributes. Many decision makers experience difficulty in assessing trade-off weights. A sensitivity analysis of the trade-off weight, though, can reveal whether a decision maker must make a more precise judgment. Reconsider the summer-job example described and analyzed in Chapter 4 (pages 138-145). In the analysis, we used trade-off weights of k, = 0.50 for salary and k,-0.40 for fun (see Figure 4.36).Explanation / Answer
Solution:
5.9 is solved, please repost the other one.
5.9
We only look at the scenarios when the temperature is cold enough to destroy crops as in the other case there is no loss
So, the grower must choose burners as the expected loss is the least in that case.
I hope this helps, please let me know in case of any doubt. Thumbs up if this helped.
Scenario Loss when temperature is cold Loss otherwise(fair weather) Expected loss No action 50000 0 0.5*50000+0.5*0=25000 Set burners 5000 + 20000(taking max damage) = 25000 5000 (cost of burner) 25000*0.5+5000*0.5=15000 Sprinklers 2000+30000=32000 2000 0.5*(2000+32000) = 17000