The concessionaire for Carnegie Hall has developed a table o

The concessionaire for Carnegie Hall has developed a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd).

Large

Average

Small

Alternative 1

9,000

12,000

-2,000

Alternative 2

22,000

6,000

6,000

Alternative 3

15,000

12,000

5,000

The concessionaire has no idea what sort of crowd might materialize — it has been decades since the Del Aires last performed together, but there has been a resurgence in interest thanks to a re-release of the classic movie Horror of Party Beach.

If the concessionaire is using the Hurwicz criteria with alpha = 0.6, the stocking decision would be                        [ Select ] [\"Alternative 2\", \"Alternative 3\", \"Alternative 1\"] .

	Large	Average	Small
Alternative 1	9,000	12,000	-2,000
Alternative 2	22,000	6,000	6,000
Alternative 3	15,000	12,000	5,000

Solution

HURCWICZ CRITERIA LARGE AVERAGE SMALL ALTERNATIVE1 9000 12000 -2000 ALTERNATIVE2 22000 6000 6000 ALTERNATIVE3 15000 12000 5000 ALPHA =0 .6 hurqwicz criteria alpha (best case ) + 1-alpha (worst case) {1-alpha}= 0.4 ALTERNATIVE1 0.6(12000)+0.4(-2000) = 6400 ALTERNATIVE 2 0.6(22000)+0.4(6000) = 15600 ( BEST ALTERNATIVE) ALTERNATIVE 3 0.6(15000)+ 0.4(5000) = 11000 IF concessionaire is using the Hurwicz criteria with alpha = 0.6, the stocking decision would be ALTERNATIVE 2