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Political Systems, Inc., is a new firm specializing in information services such as surveys and data analysis for individuals running for political office. The firm is opening its headquarters in Chicago and is considering three office locations, which differ in cost due to square footage and office equipment requirements. The profit projections shown(in thousands of dollars) for each location were based on both strong demand and weak demand states of nature.
Demand Office Location Strong Weak
A 200 -20
B 120 10
C 100 60
Initially, management is uncomfortable stating probabilities for the states of nature. Let p denote the probability of the strong demand state of nature. What does graphical sensitivity analysis tell management about location preferences?
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