QUESTION $6[$Total: $15$ marks$]$

Mohan Company is trying to set the price for one of the new products. Three pricing schemes A$,B$ and $C$ have been suggested. The estimated sales volume under the demand of high, average and low are indicated in the following payoff table:

$\backslash$table$[[$Pricing Scheme,Levels of Demand, Payoff $($RM$)],[$High$,$Average,Low$],[$A$,1,600,1,400,1,000],[$B$,1,400,1,300,800],[$C$,1,250,1,100,600],[$Probability$,0\mathrm{.}5,0\mathrm{.}3,0\mathrm{.}2]]$

a$)$ Determine the best investment using the following decision criteria:

$($i$)$ Maximax

$[2$ marks$]$

$($ii$)$ Maximin

$($iii$)$ Equally likely criterion

$[2$ marks$]$

$($iv$)$ Criterion of realism, using $=0\mathrm{.}4$

$[2$ marks$]$

$($v$)$ Minimax regret criterion

$[2$ marks$]$

$[4$ marks$]$

b$)$ What decision would maximize the expected sales volume?

$[3$ marks$]$