1. If the decision-maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using the MAXIMAX criterion? 2. What decision alternative will he choose if using the MAXIMIN criterion? 3. What about MINIMAX REGRET CRITERION?
1. If the decision-maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using the MAXIMAX criterion? 2. What decision alternative will he choose if using the MAXIMIN criterion? 3. What about MINIMAX REGRET CRITERION?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Supposed that a decision-maker faced with four decision alternatives and four states of nature develops the following profit payoff table.
1. If the decision-maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using the MAXIMAX criterion?
2. What decision alternative will he choose if using the MAXIMIN criterion?
3. What about MINIMAX REGRET CRITERION?
4. What decision would he make if using the criterion of realism at alpha 0.6 is used?
Transcribed Image Text:DECISION
ALTERNATIVE
DI
D2
D3
D4
S1
10
8
10
11
STATE OF NATURE
S3
14
11
9
8
S2
9
10
으으으
10
10
S4
5
7
11
14
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