Decision using maximax-maximin and minimax regret criteria

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Reference no: EM132170764

1. The Miramar Company is planning to introduce one of three new sailboats for the 2010 season: the navigator, the empress, or the seagull. The market conditions (favorable, stable, or unfavorable) will determine the profit or loss the company realizes, as shown in the following payoff table (in millions of dollars):

Market Conditions

Product Favorable Stable Unfavorable

Navigator 120 70 -30

Empress 90 40 20

Seagull 40 35 30

a) Determine the best decision using the maximax, maximin, and minimax regret criteria.

b) What is the best alternative assuming the following probabilities for future market conditions: favorable - 0.2; stable - 0.3; and unfavorable - 0.5?

c) Determine the maximum price the firm would be willing to pay to a market research firm to gain better information about future market conditions.

Reference no: EM132170764

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