DECISION ANALYSIS IN$-$CLASS QUESTIONS

QUESTION $1$

A hotel has to choose one of three new holiday packages to introduce to the market for the

coming winter season. The packages are quite different, and the hotel$$s occupancy rate will

depend on the package chosen and the global economic conditions. The hotel$$s marketing

manager has forecast the occupancy rates, shown in the following table, for each package and

each of the three possible economic conditions.

Economic Conditions

Bad Average Good

Package A $803045$

Alternatives Package B $209055$

Package C $607096$

Determine which alternative would be selected for each of the following decision criteria:

i$.$ Maximin

ii$.$ Maximax

iii. Minimax regret

iv$.$ Hurwicz criterion, with alpha $=0\mathrm{.}4.$

v$.$ Laplace criterion.