QUESTION 3 Given is a decision payoff table and a Sub Decision Payoff Table. Use
ID: 435267 • Letter: Q
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QUESTION 3 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 ModerateHigh 36 38 32 Small Faclity 45 Large Facility 11 AlternativesWorst Small Facility 27 31 45 Medium Facility 27 Regrets 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 facilityExplanation / Answer
We have following a decision payoff table
Future Demand
Alternatives
Low
Moderate
High
Small Facility
45
36
27
Medium Facility
27
38
31
Large Facility
-11
32
45
The regret of each payoff in calculated by subtracting that payoff from the maximum possible payoff in that scenario in following manner -
Future Demand
Alternatives
Low
Moderate
High
Small Facility
45 -45 = 0
38 -36 = 2
45 -27 = 18
Medium Facility
45 -27 = 18
38 -38 = 0
45 -31 = 14
Large Facility
45 – (-11) = 56
38 -32 = 6
45 -45 = 0
Now based on the above calculation create a regret table in following manner and select the worst regret (maximum regret of each row)
Regret table
Alternatives
Low
Moderate
High
Worst Regrets
Small Facility
0
2
18
18
Medium Facility
18
0
14
18
Large Facility
56
6
0
56
Alternatives
Worst Regrets
Small Facility
18
Medium Facility
18
Large Facility
56
a) The worst regrets for alternative Small Facility is 18
b) The worst regrets for alternative Medium Facility is 18
c) The worst regrets for alternative Large Facility is 56
d) The best course of action or decision by using Minimax Regret is to select alternative Small Facility or Medium facility as the Worst Regrets are equal for these two facilities.
Future Demand
Alternatives
Low
Moderate
High
Small Facility
45
36
27
Medium Facility
27
38
31
Large Facility
-11
32
45
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