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:

Nightmares

Vivid and disturbing dreams that cause emotional distress, typically occurring during REM sleep.

Sleep Stage

Phases of sleep characterized by specific brain waves and neurological activity, including REM and various stages of NREM sleep.

Sleepwalking

Sleepwalking, or somnambulism, is a sleep disorder where a person walks or performs other activities while not fully awake.

Slow-Wave Sleep

A deep phase of sleep characterized by slow brain waves, reduced heart rate, and low metabolic activity, crucial for physical and mental restoration.