Homework Sourse1 Pizza King and Noble Greek are two competing restaurants E
1 Pizza King and Noble Greek are two competing restaurants. Each must determine simultaneously whether to undertake small, medium, or large advertising campaigns. Pizza King believes that it is equally likely that Noble Greek will undertake a small, a medium, or a large advertising campaign. Given the actions chosen by each restaurant, Pizza King\'s profits are as shown in Table 7. For the maximin, maximax, and minimax regret criteria, determine Pizza King\'s choice of advertising campaign. TABLE 7 Noble Greek Chooses Medium $5,000 Pizza King Small $6,000 $9,000 Large Chooses Small Medium $5,000 $6,000 $1,000 Large $2,000 $6,000 SO
Solution
MAXMIN:
6000
5000
2000
6000
5000
6000
1000
6000
9000
6000
0
9000
Therefore maximax is $9000
MAXIMIN:
6000
5000
2000
2000
5000
6000
1000
1000
9000
6000
0
0
Therefore maximin is $2000
MINIMAX of regret criteria:
Regret table = Max of the row-the value in each cell.
9000-6000
6000-5000
2000-2000
9000-5000
6000-6000
2000-1000
9000-9000
6000-6000
2000-0
Is equal to,
3000
1000
0
3000
4000
0
1000
4000
0
0
2000
2000
Therefore the MINIMAX regret criteria is $2000
| 6000 | 5000 | 2000 | 6000 |
| 5000 | 6000 | 1000 | 6000 |
| 9000 | 6000 | 0 | 9000 |
