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Even though independent gasoline stations have been having a difficult time, Susan Solomon has been thinking about starting her own independent gasoline station. Susan's problem
Even though independent gasoline stations have been having a difficult time, Susan Solomon 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: GOOD MARKET SIZE OF FIRST STATION FAIR MARKET is POOR MARKET ($) Small 50,000 20,000 -10,000 Medium 80,000 30,000 --20,000 100,000 30,000 - 40,000 Large Very large 300,000 25,000 -160,000 Values on table represent profits (-loss) for each alternative and state of nature. 1- What is the Maximax decision? 2- What is the Maximin decision? 3- What is the criterion of realism (Hurwicz) decision? Use an O value of 0.8. Show all your calculations
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