Jeffrey Helm owns a health and fitness center called Bulk- Up in Harrisburg. He is considering adding more floor space to meet increasing demand. He will either add no floor space ( N), a moderate area of floor space ( M), a large area of floor space ( L), or an area of floor space that doubles the size of the facility ( D). Demand will either stay fixed, increase slightly, or increase greatly. The following are the changes in Bulk- Up’s annual profits under each combination of expansion level and demand change level:

Jeffrey is risk averse and wishes to use the maximin criterion.
a) What are his decision alternatives and what are the states of nature?
b) What should hedo?

  • CreatedMarch 20, 2014
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