Question: Problem #5 (2 points) Using the payoff table below (where (payoffs are Net Present Value in USD millions) and show all your work/calculations: Determine the

Problem #5 (2 points)

Using the payoff table below (where (payoffs are Net Present Value in USD millions) and show all your work/calculations:

  1. Determine the best alternative using the Maximin criterion (explain).
  2. Determine the best alternative using the Maximax criterion (explain).
  3. Determine the best alternative using the Laplace criterion (explain).
  4. Determine the best alternative using the Minimax Regret criterion (explain).

Alternative

 State of Nature (payoffs are Net Present Value in USD millions)
Small demand (0.4) Medium Demand (0.5) Large Demand (0.1)
Subcontract 1.0 1.3 1.8
Expand 1.5 1.6 1.7
Build 1.4 1.1 2.4

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