Determining maximin decision rule

Reference no: EM1371545

Although Ken Brown (discussed in problem 3-16) is the principal owner of Brown Oil, his brother Bob is credited with making the company a financial success. Bob is vice president of finance. Bob attributes his success to his pessimistic attitude about business and the oil industry. Given the information in problem 3-16, it is likely that Bob will arrive at a different decision. What decision criterion should Bob use, and what alternative will he select?

See below for the info from 3-16

Kenneth Brown is the principal owner of Brown Oil, Inc. After quitting his university teaching job, Ken has been able to increase his annual salary by a factor of over 100. At the present time, Ken is forced to consider purchasing some more equipment for Brown Oil because of competition. His alternatives are shown in the following table:

Equipment Favorable Market Unfavorable Market
Sub 100 300,000 (200,000)
Oiler J 250,000 (100,000)
Texan 75,000 (18,000)

For example, if Ken purchases a sub 100 and if there is a favorable market, hje will realize a profit of 300,000. On the other hand, if the market is unfavorable, Ken will suffer a loss of 200,000. But Ken has a always been a very optimistic decision maker.

Reference no: EM1371545

Questions Cloud

What is the distance in meters travelled by the car : A certain freely falling object requires 1.6s to travel the last 38.00m before it hits the ground. From what height above the ground did it fall.

Illustrate what is cost of internal common equity for pathos : Dividends paid last year were $.70. Flotation costs on issuing stock will be 10 percent of market price. Dividends and earnings per share are projected to have an annual growth rate of 15 percent. Illustrate what is cost of internal common equity ..

Prepare a company overview : Select a company or industry with which you are familiar, have access to its financial information. Gain faculty approval for your selection before beginning your assignment.

Find the resonance angular frequency of system : A 8.0 x15 swimming pool slopes linearly from a 1 depth at one end to a 3.70 depth at the other. What is the mass of water in the pool.

Determining maximin decision rule : Although Ken Brown (discussed in problem 3-16) is the principal owner of Brown Oil, his brother Bob is credited with making the company a financial success. Bob is vice president of finance.

Explain company legally change your job responsibilities : Explain company legally change your job responsibilities and reduce your salary and How would a union situation address this issue

Why an increase in varieties of a good as a gain from trade : Why is an increase in number of varieties of a good regarded as a gain from trade. Can you think of economic disadvantages associated with greater product variety.

Compute the helium in the balloon : The Mini Cooper is rated at the maximum power of 115. hp (1 hp=746 W), when moving at 80km/h. Suppose that the net force accelerating the car is constant.

Write program to caculate value of user-s stock : Write a program which caculates value of user's holding of a particular stock. Program asks for number of shares held, whole ¬dollar portion of price for one share, also the fraction portion.

User Account

All Pages