(a) What choice should be made by the optimistic decision maker? (b) What choice should be made by the conservative decision maker? (c) What decision should be made under minimal regret?
(a) What choice should be made by the optimistic decision maker? (b) What choice should be made by the conservative decision maker? (c) What decision should be made under minimal regret?
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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Question
A payoff table is given as:
|
S1 |
S2 |
S3 |
D1 |
250 |
750 |
500 |
D2 |
300 |
-250 |
1200 |
D3 |
500 |
500 |
600 |
(a) What choice should be made by the optimistic decision maker?
(b) What choice should be made by the conservative decision maker?
(c) What decision should be made under minimal regret?
(d) If the probabilities of d1, d2, and d3 are .2, .5, and .3, respectively, then what choice should be made under expected value?
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