The Quality Control Manager for ENTA Inc -What Action Would You Choose According to Minimax Regret Criterion

question 89

Essay

The quality control manager for ENTA Inc. must decide whether to accept (A1), further analyze (A2), or reject (A3) a lot of incoming material. Assume the following payoff table is available. Historical data indicates that there is 30% chance that the lot is poor quality (S1), 50 % chance that the lot is fair quality (S2), and 20% chance that the lot is good quality (S3).
$$\begin{array} { l r r r } & \mathbf { S } _ { \mathbf { 1 } } & \mathbf { S } _ { \mathbf { 2 } } & \mathbf { S } _ { \mathbf { 3 } } \\\mathbf { A } _ { \mathbf { 1 } } & 20 & 30 & 90 \\\mathbf { A } _ { \mathbf { 2 } } & 60 & 70 & 10 \\\mathbf { A } _ { \mathbf { 3 } } & 80 & 50 & 40\end{array}$$
-What action would you choose according to minimax regret criterion?

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Definitions:

Excludable

A characteristic of a good or service that allows owners or producers to prevent others from using it without paying for it.

Rival

An entity engaged in competition for the same objective or for superiority in the same field.

Public Good

Goods that are non-excludable and non-rivalrous, meaning that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Nonexcludable

Nonexcludable goods are those that cannot feasibly or reasonably be kept from individuals who do not pay for them, one of the characteristics of public goods.