ABC Inc. must make a decision on its current capacity for next year. Estimated profits (in $000s) based
on next year's demand are shown in the table below.
Next Year's Demand
Alternative Low High
Expand $100 $200
Subcontract $50 $120
Do nothing $40 $50
Using the information above, which alternative should be chosen based on the Laplace criterion?
3 of 3
Consider the following payoff table that represents the profits earned for
each alternative (A, B, and C) under the states of nature S1, S2, and
A $60 $145 $120
B $75 $125 $110
C $95 $85 $130
Using the minimax regret criterion of realism, which alternative would