A Manager Is Deciding Whether or Not to Build a Small

question 10

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 $100.If the manager chooses a small facility and demand is high, the payoff is $300.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 Laplace criterion?
(b)What would be the best decision based on Hurwicz's criterion of realism using α = 0.6?

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Definitions:

MMPI

The Minnesota Multiphasic Personality Inventory, a comprehensive psychological test designed to assess a variety of personality traits and psychopathologies.

Personality Disorders

A group of mental disorders characterized by enduring maladaptive patterns of behavior, cognition, and inner experience.

Depression Scale

A tool used to assess the severity of depressive symptoms in individuals.

Predictive Validity

The degree to which a result from a test or scale forecasts future results in a related area.