QUESTION 6 Given is a decision payoff table and a Sub Decision Payoff Table. Use

Question

QUESTION 6 Given is a decision payoff table and a Sub Decision Payoff Table. Use Minimax Regret as an evaluation criterion to evaluate altermatives. Future Demand Worst Alternatives Small Facility Medium Facility Large Facility Low Moderate 170 160 40 180 200 210 High 200 220 310 Alternatives Small Facility Medium Facility Large Facility a) The worst regrets for alterative Small Facility is b) The worst regrets for alternative Medium Facility is c) The worst regrets for alternative Large Facility is d) The best course of action or decision by using Minimax Regret is to select facility

Explanation / Answer

For finding the worst regret and hence taking a decision, we'll create a regret table using the following steps:

1. Find the maximum payoff from each column.

2. Subtract each payoff from maximum payoff of the column.

3. Identify the maximum (worst) regret for each facility.

The table below shows different values:

The worst regret for the alternative small facility is = 110

The worst regret for the alternative medium facility is = 90

The worst regret for the alternative large facility is = 210

The best course of action or decision by using Minimax regret is to select Medium facility as it has minimum regret.

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