Question

Even though independent gasoline stations have been having a difficult time, Susan Helms has been thinking about starting her own independent gasoline station. Susan’s problem is to decide how large her station should be. The annual returns will depend on both the size of her station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, Susan developed the following table:


For example, if Susan constructs a small station and the market is good, she will realize a profit of $50,000.
(a) Develop a decision table for this decision, like the one illustrated in Table A.2 earlier.
(b) What is the maximax decision?
(c) What is the maximin decision?
(d) What is the equally likely decision?
(e) Develop a. decision tree. Assume each outcome is equally likely then find the highestEMV.


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  • CreatedJuly 23, 2013
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