Question 1: Based on what you have studied in the decision analysis theory, solve the following problem: (10 marks)

	State of Nature
Alternatives	Favorable	Unfavorable
Construct Large firm	400 000	- 380 000
Construct Small firm	200 000	- 40 000
Do nothing	0	0
Probabilities	0.5	0.5

From the table above solve the following questions:

1. What is the maxi-max decision (Optimistic)? (1 Mark)
2. What is the maxi-min decision (pessimistic)? (1 Mark)
3. What is the equally likely decision? (1 Mark)
4. What is the criterion of realism? Use value of 0.8(2 Marks)
5. Develop an opportunity loss table and determine the mini-max regret decision.

(3 Marks)

6. Determine the EMV criterion if the decision making environment is under risk. (2 marks)