Samoa ltd has to decide which of the three mutually exclusive products: X, Y & Z...

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Samoa ltd has to decide which of the three mutually exclusive products: X, Y & Z to launch. The company's directors believe that the demand for the three products will valley depending on competitor's reaction. There is a 30% chance that the competitor's reaction will be strong, a 20% that the reaction will be normal, and 50% chance that the reaction will be weak. The company uses expected value to make this type decision. The net present values of the possible outcomes are as follows: Competitors reaction Strong Normal Weak Product X sh "000" 400 600 Product Y sh "000" (e) Savage regret/minimax regret (f) Expected monetary value (g) Value of information (h) Expected opportunity loss Product Z sh "000" 1,200 800 900 1,200 1,000 1,600 1,000 A market researcher believes that he could provide perfect information for the above market. Required: Using the following decision criterion, find the best option. (a) Minimax criterion (b) Maximin criterion (c) Laplace rule/Equal probabilities criterion. (d) Hurwicz/Coefficient of optimism using a 0.6 (2 marks). (2 marks). (2 marks). marks) (3 (3 marks) (3 marks) (3marks) (4 marks) Samoa ltd has to decide which of the three mutually exclusive products: X, Y & Z to launch. The company's directors believe that the demand for the three products will valley depending on competitor's reaction. There is a 30% chance that the competitor's reaction will be strong, a 20% that the reaction will be normal, and 50% chance that the reaction will be weak. The company uses expected value to make this type decision. The net present values of the possible outcomes are as follows: Competitors reaction Strong Normal Weak Product X sh "000" 400 600 Product Y sh "000" (e) Savage regret/minimax regret (f) Expected monetary value (g) Value of information (h) Expected opportunity loss Product Z sh "000" 1,200 800 900 1,200 1,000 1,600 1,000 A market researcher believes that he could provide perfect information for the above market. Required: Using the following decision criterion, find the best option. (a) Minimax criterion (b) Maximin criterion (c) Laplace rule/Equal probabilities criterion. (d) Hurwicz/Coefficient of optimism using a 0.6 (2 marks). (2 marks). (2 marks). marks) (3 (3 marks) (3 marks) (3marks) (4 marks)

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The detailed answer for the above question is provided below a Minimax Criterion Product X has the lowest worstcase outcome 400 shs so it is the best ... View the full answer