Following is the payoff table for the Pittsburgh Development Corporation (PDC) Condominium Project. Amounts are in millions of dollars. State of Nature Decision Alternative Strong Demand S1 Weak Demand S2 Small complex, d1 9 8 Medium complex, d2 13 3 Large complex, d3 19 -9 Suppose PDC is optimistic about the potential for the luxury high-rise condominium complex and that this optimism leads to an initial subjective probability assessment of 0.8 that demand will be strong (S1) and a corresponding probability of 0.2 that demand will be weak (S2). Assume the decision alternative to build the large condominium complex was found to be optimal using the expected value approach. Also, a sensitivity analysis was conducted for the payoffs associated with this decision alternative. It was found that the large complex remained optimal as long as the payoff for the strong demand was greater than or equal to $16 million and as long as the payoff for the weak demand was greater than or equal to -$21 million. Consider the medium complex decision. How much could the payoff under strong demand increase and still keep decision alternative d3 the optimal solution? If required, round your answer to two decimal places. The payoff for the medium complex under strong demand remains less than or equal to $_______________ (fill in the blank) million, the large complex remains the best decision. Consider the small complex decision. How much could the payoff under strong demand increase and still keep decision alternative d3 the optimal solution? If required, round your answer to two decimal places. The payoff for the small complex under the strong demand remains less than or equal to $_____________(fill in the blank) million, the large complex remains the best decision.
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Following is the payoff table for the Pittsburgh Development Corporation (PDC) Condominium Project. Amounts are in millions of dollars.
| State of Nature | ||
| Decision Alternative | Strong Demand S1 | Weak Demand S2 |
| Small complex, d1 | 9 | 8 |
| Medium complex, d2 | 13 | 3 |
| Large complex, d3 | 19 | -9 |
Suppose PDC is optimistic about the potential for the luxury high-rise condominium complex and that this optimism leads to an initial subjective
- Consider the medium complex decision. How much could the payoff under strong demand increase and still keep decision alternative d3 the optimal solution? If required, round your answer to two decimal places.
The payoff for the medium complex under strong demand remains less than or equal to $_______________ (fill in the blank) million, the large complex remains the best decision. - Consider the small complex decision. How much could the payoff under strong demand increase and still keep decision alternative d3 the optimal solution? If required, round your answer to two decimal places. The payoff for the small complex under the strong demand remains less than or equal to $_____________(fill in the blank) million, the large complex remains the best decision.
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