Operations Management: Other Operations Management Problems – #29552

Question: HiEd has to decide on construction of new dorms. They can build a small dorm or a large dorm. They could also decide to build nothing at all. The impact on HiEd’s net revenue is given in the table below:

Big Increase Small Increase Decrease
No building 10,000 12,000 -10,000
Small Dorm 85,000 120,000 -20,000
Large dorm 110,000 50,000 -80,000

a) If HiEd takes an optimistic approach, what should they do?

b) If HiEd takes a pessimistic approach, what should they do?

c) An educational consultant reports that there is a 40% chance of a small enrollment increase and a 10% chance of a large increase in enrollment. What should HiEd do?


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