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 optimistic the stocking decision would be                        [ Select ] ["Alternative 1", "Alternative 2", "Alternative 3"] .

Answer 1

OPTIMISTIC APPROACH
	LARGE	AVERAGE	SMALL		MAXIMUM
ALTERNATIVE1	9000	12000	-2000		12000
ALTERNATIVE2	22000	6000	6000		22000
ALTERNATIVE3	15000	12000	5000		15000
NOTE
One way to make this decision is the optimistic approach, also called the maximax approach. This involves choosing the option with the largest possible payoff or the smallest possible cost
In the above situation the maximum from each states of nature has to be selected.
The alternative 2 which has maximum of 22000 shall be selected based on optimistic approach