PLEASE SEE COMMENT Opportunity Loss table STATES OF NATURE A

PLEASE SEE COMMENT

Opportunity Loss table

                                                       STATES OF NATURE

ALTERNATIVES                       A                 B                  C

Alternative 1                            20                100                0

Alternative 2                           100                 0                 25

Alternative 3                             0                  40                90

What decisions should be made based on the minimax regret criterion? How do you determine?

Solution

Opportunity Loss table ( Using Minimax Regret Criterion)

                                                       STATES OF NATURE

ALTERNATIVES                       A                 B                  C

Alternative 1                           100-20=80 100 -100=0    100-0=100           

Alternative 2                           100-100=0    100-0=100     100-25=75

Alternative 3                            90- 0=90       90-40=50       90-90=0

Column Maximum                    90                   100             100

                                            minimax

                                             regret

Decision : States of Nature A Answer