Even though independent gasoline stations have been having a difficult time Susan Solomon has been thinking about starting her own
independent gasoline station. Susan%u2019s problem is to decide how large her station should be. The annual returns will depend on both the size of her station
and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis Susan developed the following
table: Size of market Profit in Good Market Profit in Fair Market Profit in Poor Market
Small 50000 20000 -10000
Medium 80000 30000 -20000
Large 100000 30000 -40000
Very Large 300000 25000 -160000 For example if Susan constructs a small station and the market is good she will realize a profit of $50000. a) What is the maximax decision?
b) What is the maximin decision?
c) What is the equally likely decision?
d) What is the Hurwicz (criterion of realism) decision with a = 0.8?
e) What is the minimax regret decision?