Even though independent gasoline stations have been having a difficult time, Susan Helms has been thinking about starting her own independent gasoline station. Susan's problem is to decide how large her station should be. The annual returns will depend on both the size of her station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, Susan developed the following table:
STATE OF NATURE
Size of First Station GOOD MARKET FAIR MARKET POOR MARKET
Small 40,000 18,000 -8,000
Medium 90,000 27,000 -22,000
Large 105,000 27,500 -36,000
Very Large 320,000 26,000 -180,000
For example, if Susan constructs a small station and the market is good, she will realize a profit of 40,000.
1) Using the decision making under uncertainty with the criterion of Maximax
The appropriate decision will be ___________ (Very large, large, medium or small)
The value of the return under this decision is $_____________
2) Using the decision making under uncertainty with the criterion of Maximin
The appropriate decision will be ___________ (Very large, large, medium or small)
The value of the return under this decision is $_____________
3) Using the decision making under uncertainty with the criterion of Equally Likely
The appropriate decision will be ___________ (Very large, large, medium or small)
The value of the return under this decision is $_____________