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A local real estate investor in Orlando is considering three alternative investments: a motel, a restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourists; profits from the theater will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment: Gasoline Availability Investment Shortage Stable Supply Surplus Motel $-8,000 $15,000 $20,000 Restaurant 2,000 8,000 6,000 Theater 6,000 6,000 5,000 Determine the best investment, using the following decision criteria. а. Махimax b. Мaximin c. Minimax regret d. Hurwicz (a = .4) e. Equal likelihood

Linear Algebra: A Modern Introduction

Linear Algebra: A Modern Introduction

4th Edition

ISBN:9781285463247

Author:David Poole

Publisher:David Poole

Chapter2: Systems Of Linear Equations

Section2.4: Applications

Problem 28EQ

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A local real estate investor in Orlando is considering three alternative investments: a motel, a
restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability
of gasoline and the number of tourists; profits from the theater will be relatively stable under
any conditions. The following payoff table shows the profit or loss that could result from each
investment:
Gasoline Availability
Investment
Shortage
Stable Supply
Surplus
Motel
$-8,000
$15,000
$20,000
Restaurant
2,000
8,000
6,000
Theater
6,000
6,000
5,000
Determine the best investment, using the following decision criteria.
а. Махimax
b. Мaximin
c. Minimax regret
d. Hurwicz (a = .4)
e. Equal likelihood

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