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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?

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?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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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?

DECISION STATE OF NATURE ALTERNATIVE S1 S2 S3 S4 D1 10 14 D2 8 10 11 7 D3 10 10 9. 11 D4 11 10 8 14
Transcribed Image Text:DECISION STATE OF NATURE ALTERNATIVE S1 S2 S3 S4 D1 10 14 D2 8 10 11 7 D3 10 10 9. 11 D4 11 10 8 14
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