Supposed that a decision-maker faced with four decision alternatives and four states of nature develops the following profit payoff table. 1. If the decision-maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using the MAXIMAX criterion? 2. What decision alternative will he choose if using the MAXIMIN criterion? 3. What about MINIMAX REGRET CRITERION? 4. What decision would he make if using the criterion of realism at alpha 0.6 is used?
Supposed that a decision-maker faced with four decision alternatives and four states of nature develops the following profit payoff table. 1. If the decision-maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using the MAXIMAX criterion? 2. What decision alternative will he choose if using the MAXIMIN criterion? 3. What about MINIMAX REGRET CRITERION? 4. What decision would he make if using the criterion of realism at alpha 0.6 is used?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Supposed that a decision-maker faced with four decision alternatives and four states of nature develops the following profit payoff table.
1. If the decision-maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using the MAXIMAX criterion?
2. What decision alternative will he choose if using the MAXIMIN criterion?
3. What about MINIMAX REGRET CRITERION?
4. What decision would he make if using the criterion of realism at alpha 0.6 is used?
Transcribed Image Text:DECISION
STATE OF NATURE
ALTERNATIVE
S1
S2
S3
S4
D1
10
14
D2
8
10
11
7
D3
10
10
9.
11
D4
11
10
8
14
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