QUESTION 4 Given is a decision payoff table and a Sub Decision Payoff Table. Use

Question

QUESTION 4 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 Low Moderate High Small Facility 28 Medium Facility 24 Large Facility10 17 35 35 15 28 42 AlternativesWorst Small Facility? Large Faciity Regrets Medium Facilit 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

To find the worst regret we minus each demand (low, medium and high) from the highest demand in each low, moderate and high column.

Worst regrets is the highest value in each row of Small, Medium and Large facilty.

A. The worst regret is 27 for Small facility.

B. The worst regret is 14 for Medium facility.

C. The worst regret is 38 for Large facility.

D. The best action using Minimax Regret is to choose the facility with lowest regret which is 14 for Medium Facility.

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Alternatives Low Moderate High Small Facility 28 - 28 = 0 35-17 = 18 42-15 = 27 Medium Facility 28 - 24 = 4 35-35 = 0 42-28 = 14 Large facility 28 -(-10) = 38 35-35 = 0 42-42 = 0

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