Question

The concessionaire for Carnegie Hall has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd).

	Large	Average	Small
Alternative 1	9,000	12,000	-2,000
Alternative 2	22,000	6,000	6,000
Alternative 3	15,000	12,000	5,000

The concessionaire has no idea what sort of crowd might materialize — it has been decades since the Del Aires last performed together, but there has been a resurgence in interest thanks to a re-release of the classic movie Horror of Party Beach.

If the concessionaire is using the Hurwicz criteria with alpha = 0.6, the stocking decision would be                        [ Select ] ["Alternative 2", "Alternative 3", "Alternative 1"] .

Answer 1

HURCWICZ CRITERIA
	LARGE	AVERAGE	SMALL
ALTERNATIVE1	9000	12000	-2000
ALTERNATIVE2	22000	6000	6000
ALTERNATIVE3	15000	12000	5000
ALPHA =0 .6
hurqwicz criteria
alpha (best case ) + 1-alpha (worst case)			{1-alpha}= 0.4
ALTERNATIVE1
0.6(12000)+0.4(-2000)	=	6400
ALTERNATIVE 2
0.6(22000)+0.4(6000)	=	15600	( BEST ALTERNATIVE)
ALTERNATIVE 3
0.6(15000)+ 0.4(5000)	=	11000
IF concessionaire is using the Hurwicz criteria with alpha = 0.6, the stocking decision would be ALTERNATIVE 2