Chapter 5.S, Problem 12P

a)

Summary Introduction

To construct: A decision tree.

Introduction:

Decision tree is one of the methods used in decision-making process. It would graphically represent the available alternatives and states of nature. It would also mention the payoffs and probabilities of the alternatives. It helps to choose the best alternative that would give the best result among the alternatives.

b)

Summary Introduction

Approach: 1

To identify: Decision making under uncertainty.

Maximax decision:

Maximax is the decision making method which come decision making under uncertainty. This method finds an alternative that maximizes the maximum outcome of each alternative or we can say that calculating the maximum outcome within every alternative.