Required:
Advice the company on the best price to set using the following criteria,
a) i) Maximax decision rule
ii)Maximin decision rule
iii)Laplace criterion of rationality
iv) Minimax Regret Criterion

Transcribed Image Text:

Assume that Orbit Itd is trying to set the selling price of one of its products and the following prices are under consideration: Kshs. 4.00, Kshs. 4,30 and Kshs. 4.40 The following information is also provided Alternatives Kshs. 4.00 Conditions Best possible Most likely Most possible 16,000 14,000 10,000 Kshs 4.30 Fixed costs Kshs. 20,000 Variable cost per unit = kshs. 2 per unit 14,000 12,500 8,000 Kshs 4.40 12,500 12,000 6,000 Assume that Orbit Itd is trying to set the selling price of one of its products and the following prices are under consideration: Kshs. 4.00, Kshs. 4,30 and Kshs. 4.40 The following information is also provided Alternatives Kshs. 4.00 Conditions Best possible Most likely Most possible 16,000 14,000 10,000 Kshs 4.30 Fixed costs Kshs. 20,000 Variable cost per unit = kshs. 2 per unit 14,000 12,500 8,000 Kshs 4.40 12,500 12,000 6,000

Answer rating: 100% (QA)

The detailed answer for the above question is provided below a i Maximax decision rule Maximax decis... View the full answer