Assignment No. 1 Marks: 15
“Assignment Title”
Mr. A is the Operations Manager of ABC Company. He has been given the responsibility to make the decision for constructing a restaurant. He has three available alternative points to construct it out. First alternative is to construct on road S, second is to construct on road M, and third is to construct on road D. The data for expected payoff under three states of nature is available in the following table.
POSSIBLE FUTURE DEMANDS
Alternatives Low Moderate High
Road S Rs. 40 M Rs. 40 M Rs 50 M
Road M Rs. 55 M Rs.60 M Rs 75 M
Road D Rs. 30 M Rs 55 M Rs 85 M
Assuming the payoff under each state of nature what decision would be appropriate using each
of the following criteria.
a. Maximin
b. Maximax
c. Minimax regret
d. Laplace
Note: Calculation along with interpretation is required in order to attempt this question. In the case students do not calculate and interpret, and just write the answers, will be given low marks or no marks.
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