Assignment 1 A manager\'s staff has compiled the information below which pertain
ID: 325266 • Letter: A
Question
Assignment 1
A manager's staff has compiled the information below which pertains to four capacity alternatives. Values in the matrix are present value in thousands of dollars.
State of Nature
1
2
3
4
Alternative
A
10
1
4
6
B
5
5
8
4
C
6
7
3
8
D
8
9
4
2
(A) Assuming a maximax strategy, which alternative would be chosen?
(B) If maximin were used, which alternative would be chosen?
(C) If states of nature are equally likely and an expected value criterion of maximization is used, which alternative would be chosen?
(D) Assuming a minimax regret strategy, which alternative would be chosen?
State of Nature
1
2
3
4
Alternative
A
10
1
4
6
B
5
5
8
4
C
6
7
3
8
D
8
9
4
2
Explanation / Answer
Best of A-10
Best of B- 8
BEST OF C-8
BEST OF D-9
SO this strategy will choose A-10
B) Maximin strategy selects the best of the worst
Worst of A-1
WORST OF B-4
WORST OF C-3
WORST OF D-2
BEST OF THE WORST IS B-4
C) Here we calculate the averages
A-5.25
B-5.5
C-6
D-5.75
THE BEST OF all is C-6
D) here we will choose the highest value of each colon and subtract it from other values in the column and find the maximum regret from each row and finally select the minimum regret
1
2
3
4
A
0
8
4
2
B
5
4
0
4
C
4
2
5
0
D
2
0
4
6
MAXIMUM REGRET OF A-8, B-5, C-5, D-6
WE CHOOSE THE MINIMUM OF THESE SO WE WILL CHOSE B-5
1
2
3
4
A
0
8
4
2
B
5
4
0
4
C
4
2
5
0
D
2
0
4
6