A Manager Is Deciding Whether or Not to Build a Small

question 93

Essay

A manager is deciding whether or not to build a small facility.Demand is uncertain and can be either at a high or low level.If the manager chooses a small facility and demand is low, the payoff is $300.If the manager chooses a small facility and demand is high, the payoff is $100.On the other hand, if the manager chooses a large facility and demand is low, the payoff is -$200, but if demand is high, the payoff is $800.
(a)What would be the best decision based on the maximax criterion?
(b)What would be the best decision based on the maximin criterion?
(c)What would be the best decision based on the minimax regret?

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Definitions:

Formulating A Hypothesis

The process of developing a testable and predictive statement or question based on observations, theories, or existing knowledge.

Discipline of Psychology

The scientific study of the mind and behavior, encompassing various fields such as cognitive, social, developmental, and clinical psychology.

Science of Behavior

The systematic study and investigation of human and animal behavior through controlled and naturalistic observation and disciplined scientific experimentation.

Aggressive Urges

Innate or learned desires that lead individuals to display aggressive behaviors or actions.