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Determine the best investment using the following decision criteria: Maximax Maximin Minimax Regret Hurwicz (α = 0.4) Index of optimism Equal likelihood

Determine the best investment using the following decision criteria: Maximax Maximin Minimax Regret Hurwicz (α = 0.4) Index of optimism Equal likelihood

Practical Management Science
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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  1. A manager of a shopping mall is considering three alternative expansion projects for his mall: a small motel, a theater, or a restaurant. The construction costs are about the same, but the monthly profits can be affected by future economic conditions in the area. 

      ECONOMY CONDITIONS

            Project                                                 Poor                             Fair                  Good

Motel                                                  $7,000                       $15,000              $18,000

Restaurant                                            5,000                          10,000                20,000

Theater                                               10,000                         11,000                 13,000

 

Determine the best investment using the following decision criteria:

  1. Maximax
  2. Maximin
  3. Minimax Regret
  4. Hurwicz (α = 0.4) Index of optimism
  5. Equal likelihood
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