Question: 1.             The construction manag…

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Jun 13, 2022

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Question: 1.             The construction manag…

by | Jun 13, 2022 | Questions & Answers


1.            
The construction manager for Acme Construction, Inc. must decide
whether to build single family homes, apartments, or condominiums.
This is not a product-mix problem, but an all-or-nothing decision.
He will hire workers and rent equipment appropriate for one action
only. He estimates annual profits (in thousands of dollars) will
vary with population trends as follows:

Dwelling type

Population steady

Population grows slowly

Population grows rapidly

Single family

$100

$90

$70

Apartments

  50

170

90

Condominiums

-20

100

220

If he uses the maximin criterion, which type of dwellings will
he choose to build? Briefly explain why.

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