The alternatives 1 and 2 in the following payoff (profit) table represent the tw
ID: 3260486 • Letter: T
Question
The alternatives 1 and 2 in the following payoff (profit) table represent the two possible manufacturing strategies that the EKA manufacturing company can adopt. The level of demand affects the success of both strategies. The states of nature (Si) represent the levels of demand for the company products. S1, S2 and S3 characterize high, medium, and low demand respectively. The payoff values are in thousands of dollars.
States of Nature
S1
S2
S3
Alternative (strategy) 1
10
40
70
Alternative (strategy) 2
60
120
50
Question: The best alternative (course of action) for the EKA manufacturing company using the optimistic approach is ___________________________________ and the best possible payoff is ______________.
The best alternative (course of action) for the EKA manufacturing company using the optimistic approach is __strategy 2_ and the best possible payoff is _70_.
The best alternative (course of action) for the EKA manufacturing company using the optimistic approach is __strategy 1_ and the best possible payoff is _120_.
The best alternative (course of action) for the EKA manufacturing company using the optimistic approach is __strategy 2_ and the best possible payoff is _120_.
The best alternative (course of action) for the EKA manufacturing company using the optimistic approach is __strategy 1_ and the best possible payoff is _70_.
States of Nature
S1
S2
S3
Alternative (strategy) 1
10
40
70
Alternative (strategy) 2
60
120
50
Explanation / Answer
Ans:
Optimistic approach is Maximax approach:
Option C is correct.
The best alternative (course of action) for the EKA manufacturing company using the optimistic approach is strategy 2 and the best possible payoff is 120.
S1 S2 S3 Maximum Alternative (strategy) 1 10 40 70 70 Alternative (strategy) 2 60 120 50 120 =bestRelated Questions
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