2. Economics
3. a manager is deciding whether or not to build a...

# Question: a manager is deciding whether or not to build a...

###### Question details

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 $30. If the manager chooses a small facility and demand is high, the payoff is$10. On the other hand, if the manager chooses a large facility and demand is low, the payoff is -$20, but if demand is high, the payoff is$80. Develop the decision table. What would be the best decision based on the maximax criterion? What would be the best decision based on Hurwicz's criterion of realism using α = 0.6?

Subject: Quantitative Analysis

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