1. Using the Opportunity-Loss (aka minmax regret) strategy: What is the Maximum Regret if "One Examiner" is hired?2. Using the Opportunity-Loss (aka minmax regret) strategy: What is the Maximum Regret if "Two Examiners" are hired?3. Using the Opportunity-Loss (aka minmax regret) strategy: What is the Maximum Regret if "Three Examiners" are hired?4. If she uses the Opportunity-Loss (aka minmax regret) strategy, how many new examiners will she decide to hire? The local operations manager for the Internal Revenue Service must decide whether to hire one, two, or threetemporary tax examiners for the upcoming tax season. She estimates that net revenues (in thousands of dollars) willvary with how well taxpayers comply with the new tax code just passed by Congress, as follows:NUMBEROFEXAMINERSOneTwoThreeCOMPLIANCELOW50100150NORMAL506070HIGH5020-10

This decision making strategy is about minimizing opportunity losses-regrets. This is used by risk neutral decision makers. Disadvantages include its emphasis on the worst case scenario. Also, it ignores risk represented by probability of the state of nature 1.Regret table is constructed first. Regret =difference between each payoff and the largest payoff for that state of natureRegret table state of nature(demand)Number of examinerslownormalhighone150-50=10070-50=2050-50=0two150-100=5070-60=2050-20=30three150-150=070-70=050-(-10)=60 2. Choose maximum regret for each decision and group them as a lot. One examiner=max (100,20,0)=100Two examiner=max(50,20,30)=50Three examiner=max(0,0,60)=60 3.Choose the decision alternative that corresponding to minimum of these maximum regretsDecision chosen= Min(100,50,60)=50decision alternative corresponding=’two examiners’ 1. Maximum Regret if "One Examiner" is hired=1002. Maximum Regret if "Two Examiners" are hired=503. Maximum Regret if "Three Examiners" are hired=604. How many new examiners will she decide to hire-TWOTable:Minimax state of nature(demand) Number of examinerslownormalhighmaximum regretMinimum of ( maximum regret)Decisionone150-50=10070-50=2050-50=0100MIN(100,50,60)=50Two examinerstwo150-100=5070-60=2050-20=3050three150-150=070-70=050-(-10)=6060 1. Maximum Regret if "One Examiner" is hired=1002. Maximum Regret if "Two Examiners" are hired=503. Maximum Regret if "Three Examiners" are hired=604. No of examiners will she decide to hire-TWO