Opening small dress shop on fairbanks avenue

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Reference no: EM131664889

Maria Rojas is considering the possibility of opening a small dress shop on Fairbanks Avenue, a few blocks from the university. She has located a good mall that attracts students. Her option are to open a small shop, a medium-sized shop, or no shop at all. The market for a dress shop can be good, average or bad. The probabilities for these three possibilities are 0.2 for a good market, 0.5 for an average market, and 0.3 for a bad market. The net profit or loss for the medium-sized and small shops for the various market condition are given in the following table. Building no shop at all yield no loss and no gain.

Alternative Good Market ($) Average Market Bad Market

Small Shop 75,000 25,000 -40,000

Medium-sized Shop 100,000 35,000 -60,000

No shop 0 0 0

Determine the best decision using the following decison criteria

a. Maximax

b. Maximin

c. Minimax Regret

d. Equal likelihood

e. Expected Value

f. Expected Opportunity loss

g. Develop a decison tree with expected values at the probability nodes.

Reference no: EM131664889

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