10. Lab Week 10 Problem Solutions

# 10. Lab Week 10 Problem Solutions - Lab Week 10 Problem...

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Lab Week 10 Problem Solutions CHAPTER 10 DECISION ANALYSIS 7. a. Using minimax criteria, we are selecting the lowest of the highest costs per row (85, 60, 90). This tells us to select new staff . b. Using minimin , we select the lowest of the lowest cost per row (50, 60, 40). This tells us to select redesign collection. c. Minimax regret. Construct opportunity loss table. Select best alternative from each column (state of nature) and subtract each cell amount from that value. S 1 = 40, S 2 = 50, S 3 = 60 State of Nature Alternative Moderate High Very High Reassign 10 10 25 New 20 10 0 Redesign 0 0 30 Next, we choose the min of 25, 20, and 30 (thmme max regret in each row) to minimize our total “regret.” Thus we choose new staff. d. Equally likely is just an average of each cost row Reassign = (50+60+85)/3 = 65 New Staff = (60 + 60 + 60)/3 = 60 Redesign = (40 + 50 + 90)/3 = 60 Since the equally likely values are the same for new staff and redesign we are indifferent between the two choices.

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