Purchase Solution

Decision Analysis: Maximax, Maximin, Hurwick & Probability

Not what you're looking for?

Ask Custom Question

Please provide a detailed step by step solution to the given problems.

Problem 2:
The owner of the Burger Doodle Restaurant is considering two ways to expand operations: open a drive-up window or serve breakfast. The increase in profits resulting from these proposed expansions depends on whether a competitor opens a franchise down the street. The possible profits from each expansion in operations, given both future competitive situations, are shown in the following payoff table:

Competitor

Decision Open Not Open

Drive-up window $ - 6,000 $20,000
Breakfast 4,000 8,000

Select the best decision, using the following decision criteria.
a. Maximax
b. Maximin

Problem 4:
Brooke Bentley, a student in business administration, is trying to decide which management science course to take next quarter - I, II, or III. "Steamboat" Fulton, "Death" Ray, and "Sadistic" Scott are the three management science professors who teach the courses. Brooke does not know who will teach what course. Brooke can expect a different grade in each of the courses, depending on who teaches it next quarter, as shown in the following payoff table:

Professor

Course Fulton Ray Scott

I B D D
II C B F
III F A C

Determine the best course to take next quarter, using the following criteria.
a. Maximax
b. Maximin

Problem 6:
A company must decide now which of three products to make next year to plan and order proper materials. The cost per unit of producing each product will be determined by whether a new union labor contract passes or fails. The cost per unit for each product, given each contract result is shown in the following payoff table:

Contract Outcome

Product Pass Fail

1 $7.50 $6.00
2 4.00 7.00
3 6.50 3.00

Determine which product should be produced, using the following decision criteria.
a. Maximax
b. Maximin

Problem 8:
A local real estate investor in Orlando is considering three alternative investments: a motel, a restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline and the number of tourists: profits from the theater will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment:

Gasoline Availability

Investment Shortage Stable Supply Surplus

Motel $ - 8,000 $15,000 $20,000
Restaurant 2,000 8,000 6,000
Theater 6,000 6,000 5,000

Determine the best investment, using the following decision criteria.
a. Maximax
b. Maximin
c. Minimax regret
d. Hurwicz (a = .4)
e. Equal likelihood

Attachments
Purchase this Solution
Solution Summary

The solution provides step by step method for the calculation of Maximax, Maximin, Minimax regret, Hurwick and Equal likelihood decision rules. Formula for the calculation and Interpretations of the results are also included.

Purchase this Solution
Free BrainMass Quizzes
Know Your Linear Equations

Each question is a choice-summary multiple choice question that will present you with a linear equation and then make 4 statements about that equation. You must determine which of the 4 statements are true (if any) in regards to the equation.

Geometry - Real Life Application Problems

Understanding of how geometry applies to in real-world contexts

Graphs and Functions

This quiz helps you easily identify a function and test your understanding of ranges, domains , function inverses and transformations.

Probability Quiz

Some questions on probability

Multiplying Complex Numbers

This is a short quiz to check your understanding of multiplication of complex numbers in rectangular form.

View More Free Quizzes
Related BrainMass Solutions

  • Decision analysis: Maximax and Maximin

    Decision Open Not Open Minimum Drive-up Window (D1) -$6000 $20000 -$6000 Breakfast (D2) $4000 $8000 $4000 Maximin $4000 (D2) According to the Maximin condition, the best decision is D2 The expert examines the maximax and maximin for decision analysis

  • Decision Analysis

    Maximax b. Maximin c. Hurwicz (alpha = 0.6) d. Equal likelihood 2.

  • Decision using Maximax, Maximin, Laplace and Minimax regret

    Subcontract Uses Maximax, Maximin, Laplace and Minimax regret criteria to select an alternative and arrive at a decision.

  • Decision Making

    True False A pessimistic decision making criterion is a. maximax. b. equally likely. c. maximin. d. decision making under certainty.

  • Decision Analysis and Stable Supply Surplus

    The solution is comprised of detailed step-by-step calculations involving the various aspects of Decision Analysis and provides students with a clear perspective of Maximax Criterion, Maximin Criterion, Minimax Regret Criterion, Hurwicz Criterion and

  • Decision Analysis

    What is the optimal decision regarding at which location(s) to purchase property using the MAXIMAX decision rule? 18. What is the optimal decision regarding at which location(s) to purchase property using the MAXIMIN decision rule? 19.

  • Decision Analysis

    Using the maximax criterion, what decision should be made by the decision maker? b. Using the maximin criterion, what decision should be made by the decision maker? c.

  • Selection of Alternatives: Decision Analysis

    The solution provides step-by-step method for taking decisions using Maximax, Maximin, Laplace and Minimax regret decision rules.

  • Decision: Maximax, Maximin, Hurwicz, Equal Likelihood

    260090 Decision anaylsis using maximax,maximin, Hurwicz and equal likelihood 1. The owner of the Burger Doodle Restaurant is considering two ways to expand operations: open a drive up window or serve breakfast.

View More Related Solutions