p1-3 An investor is to purchase one of three types of real estate, as illustrated in Figure below. Theinvestor must decide among an apartment building, an office building, and a warehouse. Thefuture states of nature that wi l1 determine how much profit the investor will make are goodeconomic conditions and poor economic conditions. The profits that will result from eachdecision in the event of each state of nature are shown in Table below:States of NatureDecisionGOOD ECONOMICPOOR ECONOMIC(Purchase)CONDITIONSCONDITIONS$ 50,000Apartment buildingOffice building$ 30,000- 40,000100,000Warehouse30,00010,000a) Find the optimal act using Maxi Max criteriab) Find the optimal act using Mini Max criteriac) Find the optimal act using Maxi Min criteriad) Fi nd the optimal act using Min Max regret table

Decision making under uncertainty indicating the different criteria without considering the…

Answered: a) Find the optimal act using Maxi Max…

a) Find the optimal act using Maxi Max criteria b) Find the optimal act using Mini Max criteria c) Find the optimal act using Maxi Min criteria

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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p1-3

An investor is to purchase one of three types of real estate, as illustrated in Figure below. The
investor must decide among an apartment building, an office building, and a warehouse. The
future states of nature that wi l1 determine how much profit the investor will make are good
economic conditions and poor economic conditions. The profits that will result from each
decision in the event of each state of nature are shown in Table below:
States of Nature
Decision
GOOD ECONOMIC
POOR ECONOMIC
(Purchase)
CONDITIONS
CONDITIONS
$ 50,000
Apartment building
Office building
$ 30,000
- 40,000
100,000
Warehouse
30,000
10,000
a) Find the optimal act using Maxi Max criteria
b) Find the optimal act using Mini Max criteria
c) Find the optimal act using Maxi Min criteria
d) Fi nd the optimal act using Min Max regret table

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