3-24. (12 pts) Make decision with MiniMax Regret Method

Step 1. Construct regret table.

The given Payoff (profit) table, and column maximums.

		States of Nature
		Strong market	Fair market	Poor market
Decision Alternatives	Large facility	550,000	110,000	-310,000
	Medium facility	300,000	129,000	-100,000
	Small facility	200,000	100,000	-32,000
	No facility	0	0	0
Column maximum		550,000	129,000	0

Add a new row, Column Maximum, in the above payoff table, as Ive done for you.

Find the maximum of each column and put them in the payoff table above.

Calculate regrets by using a column-Max minus each element in the same column. Put the results in the regret table below.

The Regret Table of the above payoff table:

		States of Nature			Row Maximum
		Strong market	Fair market	Poor market
Decision Alternatives	Large facility
	Medium facility
	Small facility
	No facility

Step 2. In the Regret Table, find the maximum of each row, and put them in Row Maximum column.

Step 3. Find the value of MiniMax, the minimum of those row maximums,

MiniMax = _______________, which is associated with alternative _____________.

Therefore, the decision is alternative ________________.