solve number 2 1.The following solved problems refer to this payoff table:NewNoBridgeBuiltNewBridge14Alternative capacity1for new storeB21046where A = small, B = medium, and C = large.Assume the payoffs represent profits. Determine the alternative that would be chosen under each ofthese decision criteria:a. Maximin.b. Maximax.c. Laplace.2.Using the information in the payoff table, develop a table of regrets, and thena. Determine the alternative that would be chosen under minimax regret.b. Determine the expected value of perfect information using the regret table, assuming that theprobability of a new bridge being built is .60.3.Using the probabilities of .60 for a new bridge and .40 for no new bridge,a. Compute the expected value of each alternative in the payoff table, and identify the alternativethat would be selected under the expected-value approach.b. Construct a decision tree for the problem showing expected values.

Answered: 1. The following solved problems refer…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.2: Elements Of Decision Analysis

Problem 2P

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