12. The following data pertains to a decision: Three possible decision alternati
ID: 356350 • Letter: 1
Question
12.
The following data pertains to a decision: Three possible decision alternatives are there: Buy, Rent, or Lease. State of nature can high profits (H) or Low (L). The possble payoff are: Buy:- H= $80, L=$0; Rent:- H=$70, L= $30; Lease:- H= $30, L=$50.
The minimax regret strategy would be:
A)
buy
B)
lease
C)
rent
D)
high
E)
low
12.
The following data pertains to a decision: Three possible decision alternatives are there: Buy, Rent, or Lease. State of nature can high profits (H) or Low (L). The possble payoff are: Buy:- H= $80, L=$0; Rent:- H=$70, L= $30; Lease:- H= $30, L=$50.
The minimax regret strategy would be:
A)
buy
B)
lease
C)
rent
D)
high
E)
low
Explanation / Answer
So, Rent is the strategy
Option C
H L Buy 80 0 Rent 70 30 Lease 30 50 Step 1 (Max for H-respective) (Max for L-respective) Regret H L Buy 0 50 Rent 10 20 Lease 50 0 Step 2 (Max for H-respective) (Max for L-respective) Regret H L Max Buy 0 50 50 Rent 10 20 20 Lease 50 0 50 Step 3 (Max for H-respective) (Max for L-respective) Regret H L Max Min of the max Buy 0 50 50 Rent 10 20 20 20 Lease 50 0 50Related Questions
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