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Niue Vanilla has had two successive years in which the Vanilla bean harvest has stretched the firm’s capacity within their drying sheds. Pita, the manger for the drying operation must now make a decision on capacity for next year. Estimated profits under each of the three possible states of nature are as shown in the table below, along with 3 possible alternatives he is considering: Do Nothing, Expand the Drying Shed operation, or Subcontract to a local farmer group who can do some of the drying. Which alternative should be selected if the decision criterion is: Maximax? Maximin?

Niue Vanilla has had two successive years in which the Vanilla bean harvest has stretched the firm’s capacity within their drying sheds. Pita, the manger for the drying operation must now make a decision on capacity for next year. Estimated profits under each of the three possible states of nature are as shown in the table below, along with 3 possible alternatives he is considering: Do Nothing, Expand the Drying Shed operation, or Subcontract to a local farmer group who can do some of the drying. Which alternative should be selected if the decision criterion is: Maximax? Maximin?

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Niue Vanilla has had two successive years in which the Vanilla bean harvest has stretched the firm’s capacity within their drying sheds. Pita, the manger for the drying operation must now make a decision on capacity for next year. Estimated profits under each of the three possible states of nature are as shown in the table below, along with 3 possible alternatives he is considering: Do Nothing, Expand the Drying Shed operation, or Subcontract to a local farmer group who can do some of the drying.

Which alternative should be selected if the decision criterion is:

  1. Maximax?

  2. Maximin?

Alternatives Next Year's Demand Low Medium High $50* $60 $80 $20 $40 $50 $40 $70 $100 Do nothing Expand Subcontract *Profit in $thousand
Transcribed Image Text:Alternatives Next Year's Demand Low Medium High $50* $60 $80 $20 $40 $50 $40 $70 $100 Do nothing Expand Subcontract *Profit in $thousand
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