Given is a decision payoff table and a Sub Decision Payoff Table. Use Minimax Re

Question

Given is a decision payoff table and a Sub Decision Payoff Table. Use Minimax Regret as an evaluation criterion to evaluate alternatives Future Demand Alternatives Small Faclity 26 Medium Facility18 Large Faclty-7 Low Moderate 21 31 30 High 42 Alternatives Worst Regrets Small Facility Medium Facility Large Facility a) The worst regrets for alternative 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

We know

Regret = Best payoff - Payoff received

Worst regret is the highest in each alternative.

a) The worst regret for alternative small facility is 24

b) The worst regret for alternative medium facility is 20

c) The worst regret for alternative large facility is 33

Among the worst regret we select the best which is 20 ie medium faciliy

d) The best course of action or decision by using minimax regret is to select medium facility

Alternative Low Moderate High Small facility 26-26= 0 31-21=10 42-18=24 Medium facility 26-18=8 31-31=0 42-22=20 Large facility 26-(-7)= 33 31-30=1 42-42=0

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