Question 1 The director of social services of a county has learned that the stat

Question

Question 1 The director of social services of a county has learned that the state has mandated additional information requirements. This will place and additional burden on the agency. The director has identified three acceptable alternatives to handle the increased workload. One alternative is to reassign present staff members, the second is to hire and train two new workers, and the third is to redesign current practice so that workers can readily collect the information with little additional effort. An unknown factor is the caseload for the coming year when the new data will be collected on a trial basis. The estimated costs for various options and caseloads ate shown in the following able. Caseloads Moderate 50 000 60 000 High $60 000 $ 60 000 $60 000 Very High $ 85 000 S 60 000 90 000 Reassign Staff New staff Redesign collection$40 000 Assuming that past experience has shown the probabilities of various caseloads to be unreliable what decision would be appropriate using each of the following criteria? a. Maximin b. Maximax c. Laplace d. Minimax regret

Explanation / Answer

a. In Maximin strategy we have to  maximises the minimum cost achievable

-In reassign staff , minimum cost=$50,000

-In  new staff , minimum cost=$60,000

- In redesign collection , minimum cost=$40,000

Maximum among these is $60,000 which is New Staff

b-From this table highest maximum payoff is $90,000 so redesign collection should be selected.

c- Average of each alternatives are

Reassign staff=(50,000+60,000+85,000)/3=65,000

New staff=(60,000+60,000+60,000)/3=60,000

Redesign collection=(40,000+60,000+90,000)/3=63,333

Maximum average outcome is reassign staff ,so it should be selected.

d-In reassign staff , maximum regret=$85,000

-In  new staff , maximum regret=$60,000

- In redesign collection , maximum regrett=$90,000

We want to minimise that maximum regret, so New Staff should be choosen

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