Reference no: EM131144472
The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, moderate, or high, as follow.
Demand Bus Low Medium High
Small 50 50 70
Medium 40 80 90
Large 20 50 120
Probability 0.3 0.3 0.4
A. If he uses the maximum EMV criterion, which size bus will he decide to purchase?
B. What is his expected value of perfect information?
C. Construct the opportunity loss table. If he uses the minimum EOL criterion, which size bus will he decide to purchase?
D. If he uses the maximax criterion, which size bus will he decide to purchase?
E. If he uses the maximin criterion, which size bus will he decide to purchase?
F. If he uses the minimax criterion, which size bus will he decide to purchase?
G. If he uses the criterion of realism (Hurwicz) criterion (assume α = 0.7), which size bus will he decide to purchase?
H. If he uses the equal likely criterion, which size bus will he decide to purchase?
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