APC industries has been experiencing significant growth and has been having difficulty meeting customer demands recently. They are considering three options to address this issue. They can move to a larger facility, add a second shift or use a subcontractor to assist in production. The annual payoff of each option depends on if the current market continues to expand, hold steady or declines. The expected payoff for each combination is show in the table below Option Expand Steady DeclineMove to larger facility 250,000 125,000 -90,000Add a second shift 175,000 80000 -45,000Subcontract 90,000 15,000 -10,000 a) Which alternative should APC choose under the maximax criterion? b) Which option should APC choose under the maximin criterion? c) Which option should APC choose under the LaPlace criterion?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
APC industries has been experiencing significant growth and has been having difficulty meeting customer demands recently. They are considering three options to address this issue. They can move to a larger facility, add a second shift or use a subcontractor to assist in production. The annual payoff of each option depends on if the current market continues to expand, hold steady or declines. The expected payoff for each combination is show in the table below
Option Expand Steady Decline
Move to larger facility 250,000 125,000 -90,000
Add a second shift 175,000 80000 -45,000
Subcontract 90,000 15,000 -10,000
a) Which alternative should APC choose under the maximax criterion?
b) Which option should APC choose under the maximin criterion?
c) Which option should APC choose under the LaPlace criterion?
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