Decision Theory: Quiz Questions 1. Olive Garden is about to open a new store. Three locations...

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Decision Theory: Quiz Questions 1. Olive Garden is about to open a new store. Three locations are under consideration, with possible outcomes (depending on demand) as shown in the table to the right. Assume that the probabilities of demand states are not known (ie., uncertainty). Demand Location Low Medium High Large 70 100 130 Medium 60 130 170 Small 130 140 180 a. (2pts) Using the Laplace criterion, which location size(s) will be best? b. (2pts) Using the minimax regret criterion, which location size(s) will be best? c. (2pts) Using the maximin criterion, which location size(s) will be best? 2. Panda Express is about to open a new store. Three locations are under consideration, with possible outcomes (depending on demand) as shown in the table to the right. The three states of demand have known probabilities: Low = 20%, Medium = 30%, and High = 50%. Demand Low Medium High Location (20%) (30%) (50%) Large 35 70 105 Medium 40 75 85 Small 60 70 75 a. (2pts) Which location size(s) will give the highest expected monetary value? b. (2pts) What is the expected value of perfect information? Decision Theory: Quiz Questions 1. Olive Garden is about to open a new store. Three locations are under consideration, with possible outcomes (depending on demand) as shown in the table to the right. Assume that the probabilities of demand states are not known (ie., uncertainty). Demand Location Low Medium High Large 70 100 130 Medium 60 130 170 Small 130 140 180 a. (2pts) Using the Laplace criterion, which location size(s) will be best? b. (2pts) Using the minimax regret criterion, which location size(s) will be best? c. (2pts) Using the maximin criterion, which location size(s) will be best? 2. Panda Express is about to open a new store. Three locations are under consideration, with possible outcomes (depending on demand) as shown in the table to the right. The three states of demand have known probabilities: Low = 20%, Medium = 30%, and High = 50%. Demand Low Medium High Location (20%) (30%) (50%) Large 35 70 105 Medium 40 75 85 Small 60 70 75 a. (2pts) Which location size(s) will give the highest expected monetary value? b. (2pts) What is the expected value of perfect information?