Question: A manager is trying to decide whether to build a small, medium or large facility. Demand can be high, average, or low, with the estimated

A manager is trying to decide whether to build a
A manager is trying to decide whether to build a small, medium or large facility. Demand can be high, average, or low, with the estimated probabilities being 0.1, 0.50, and 0.4, respectively. The following payoff table has been created to help with the decision: Decision High Demand Average Demand Low Demand Small Facility $90,000 $100,000 $60,000 Med Facility $150,000 $115,000 $35,000 Large Facility $185,000 $95,000 $15,000 Which alternative is best, according to each of the following decision criteria? a. Maximin b. Maximax C. Laplace d. Minimax regret e. Expected value

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!