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
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low marks or no marks.
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