Question

Even though independent gasoline stations have been having a difficult time, Susan Solomon has been thinking about starting her own independent gasoline station. Susan's problem is to decide how large her station should be. The annual returns will depend on both the size of her station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, Susan developed the following table:

USE THIS TABLE to practice the 5 Criterion for Making Decisions under Uncertainty.   **This TIME use .4 alpha for Hurwicz.

Size of Gasoline Station	Good Market ($)	Fair Market ($)	Poor Market ($)
Small	$50,000	$20,000	$-10,000
Medium	$80,000	$30,000	$-20,000
Large	$100,000	$30,000	$-40,000

Very Large $300,000   $25,000 $-160,000

Answer 1