Homework SourseBuildRite Construction has received favorable publicity from
Build-Rite Construction has received favorable publicity from guest appearances on a public TV home improvement program. Public TV programming decisions seem to be unpredictable, so Build-Rite cannot estimate the probability of continued benefits from its relationship with the show. Demand for home improvements next year may be either low or high. But Build-Rite must decide now whether to hire more employees, do nothing, or develop subcontracts with other home improvement contractors. Build-Rite has developed the following payoff table: Demand for Home Improvements Alternative Low Moderate High Hire ($73 comma 00073,000) $132 comma 000132,000 $617 comma 000617,000 Subcontract $95 comma 00095,000 $246 comma 000246,000 $451 comma 000451,000 Do nothing $38 comma 00038,000 $123 comma 000123,000 $261 comma 000261,000 Which alternative is best, according to each of the following decision criteria? a. The best decision according to maximin criterion is alternative Subcontract Do nothing Hire and the payoff for this decision is $nothing. (Enter your response as an integer.) b. The best decision according to maximax criterion is alternative Hire Do nothing Subcontract and the payoff for this decision is $nothing. (Enter your response as an integer.) c. The best decision according to laplace criterion is alternative Do nothing Subcontract Hire and the weighted payoff for this decision is $nothing. (Enter your response as an integer.) d. The best decision according to minimax regret criterion is alternative Hire Subcontract Do nothing and the minimum maximum regret for this decision is $nothing. (Enter your response as an integer.)
Solution
Solution :
a. The best decision according to maximin criterion is alternative Subcontract Do nothing Hire and the payoff for this decision is $nothing.
Answer : Go for Hire & High
b. The best decision according to maximax criterion is alternative Hire Do nothing Subcontract and the payoff for this decision is $nothing.
Answer : Go for Do nothing & Low
c. The best decision according to laplace criterion is alternative Do nothing Subcontract Hire and the weighted payoff for this decision is $nothing.
Answer : Go for Hire
d. The best decision according to minimax regret criterion is alternative Hire Subcontract Do nothing and the minimum maximum regret for this decision is $nothing.
Answer : Go for Hire & High
| Build Rite | Row | Row | Row | |||
| Alternative | Low | Moderate | High | Max | Min | Average |
| Hire | $73,000 | $132,000 | $617,000 | $617,000 | $73,000 | $274,000 |
| Subcontract | $95,000 | $246,000 | $451,000 | $415,000 | $95,000 | $264,000 |
| Do Nothing | $38,000 | $123,000 | $300,000 | $300,000 | $38,000 | $153,667 |
