Oakey Wines has the option to lease a filling machine for the bottling of exclusive varieties that are sold in smaller volumes and require unique bottles.There are 3 options available to Oakey Wines.Oakey Wines only want to lease the machine for 3 years.The following table summarises the year costs and excess bottling charges:

Yearly cost

Bottling allowance per year

Excess charges

Option 1

$3,960

18,000

$0.75

Option 2

$4,560

22,500

$0.65

Option 3

$5,160

27,000

$0.55

All options have an excess charge when exceeding the bottling allowance.

It has been estimated that over the 3 years of the lease, there is a 40% chance that an average of 18,000 bottles will be filled per year, a 30% chance of 22,500 bottles per year and a 30% of 27,000 per year. In evaluating the costs, Oakey Wines would like to keep the costs to a minimum.

Required:

Develop a payoff (cost) table.

1. Explain and identify the maximax decision. (3 marks)
2. Explain and identify the maximin decision. (3 marks)
3. Explain and identify the equally likely decision. (3 marks)
4. Explain and identify the minimax regret decision. (3 marks)
5. Calculate the expected value of perfect information for Oakey Wines. (3 marks)