Meega airlines decided to offer direct service from Akron, Ohio to Clearwater Beach, Florida. Management must decide between full-price service using thecompany's new fleet of jet aircraft and a discount-service using smaller capacity commuter planes. Management developed estimates of the contribution to profitfor each type of service based upon three possible levels of demand for service: high, moderate, and low. The following table shows the estimated quarterlyprofits (in thousands of dollars).ServiceFull priceDiscountSelect one:Oa. D2Ob. D3c. D1d. D4Demand for serviceHigh Medium Low760 -430900710650350The probabilities for the demand levels are P(High) = 0.3, P(Medium) = 0.5, and P(Low) = 0.2, respectively.In the payoff table from the previous question, what is the optimal decision under the maximin criterion?

Maximin or Pessimistic decision making model considers the highest payoff indicating decision making…

Answered: In the payoff table from the previous…

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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In the payoff table from the previous question, what is the optimal decision under the maximin criterion? Select one: a. D2 b. D3 c. D1 d. D4