3. A fitness center is considering an expansion. Three proposals are being considered: add new pool, add new equipment or add child center. The profits for three different customer responses for each proposal are shown in the table below:
High Moderate Low
Add New Pool 100,000 60,000 50,000
Add New Equipment 120,000 80,000 30,000
Add Child Center 120,000 70,000 60,000
For this problem:
(a) What is the optimal decision when using the maximax criterion? What is the payoff for it?
(b) What is the optimal decision when using the maximin criterion? What is the payoff for it?
(c) What is the optimal decision when using the minimax regret criterion? What is the payoff for it?
(d) What is the optimal decision using the Hurwicz’s criterion if α = 0.4? What is the payoff for it?
4. For the problem given in Question 3, assume that the probability of high customer response is 0.3, the probability of moderate customer response is 0.4, and the probability of low customer response is 0.3.
(a) Calculate the expected value of each decision alternative. What is your recommendation using the expected value criterion?
(b) Calculate the expected opportunity loss value of each decision alternative. What is your recommendation using the expected opportunity loss criterion?
(c) Calculate and interpret the value of perfect information.
Why Choose Us
- 100% non-plagiarized Papers
- 24/7 /365 Service Available
- Affordable Prices
- Any Paper, Urgency, and Subject
- Will complete your papers in 6 hours
- On-time Delivery
- Money-back and Privacy guarantees
- Unlimited Amendments upon request
- Satisfaction guarantee
How it Works
- Click on the “Place Order” tab at the top menu or “Order Now” icon at the bottom and a new page will appear with an order form to be filled.
- Fill in your paper’s requirements in the "PAPER DETAILS" section.
- Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
- Click “CREATE ACCOUNT & SIGN IN” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
- From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.