Question

Given is a decision payoff table.

		Future Demand
Alternatives	Low	Moderate	High
Small Facility	35	28	29
Medium Facility	22	36	26
Large Facility	-7	27	35

a) The best decision under uncertainty using MAXIMAX is to select ______ facility

b) The best decision under uncertainty using MAXIMIN is to select _________ facility

c) The best decision under uncertainty using LAPLACE/EQUALITY LIKELY is to select _______ facility

d) If the probabilities for Future Demand when it is Low = 0.35, Moderate = 0.30, and High = 0.35, the expected monetary value (EMV) for the large facility = _______.

e) If the probabilities for Future Demand when it is Low = 0.35, Moderate = 0.30, and High = 0.35, the best decision under risk is to select ____facility.

Answer 1

a)e best decision under uncertainty using MAXIMAX is to select medium facility (As 36 is maximum of all)

b)) The best decision under uncertainty using MAXIMIN is to select  Small Facility .

c)

The best decision under uncertainty using LAPLACE/EQUALITY LIKELY is to select Small Facility

(as its average is highest amng 3 decision)

d)

expected monetary value (EMV) for the large facility =0.35*(-7)+0.3*27+0.35*35=17.9

e)

best decision under risk is to select Small Facility