. Omar and Kumba have known each other since high school. Two years ago they entered the same university and both hope to graduate with degrees in finance. In an attempt to make extra money Omar and Kumba have decided to look into the possibility of starting a small company that would provide word processing services

to students. Using a systems approach, Omar and Kumba have identified 3 strategies. Strategy 1 is to invest in a fairly expensive microcomputer system with a high- quality laser printer. In a favorable market, they should be able to obtain a net profit of $10,000 over the next 2 years. If the market is unfavorable, they can lose $8,000. Strategy 2 is to purchase a less expensive system. With a favorable market, they could get a return during the next 2 years of $8,000. With an unfavorable market, they would incur a loss of $4,000. Strategy 3, is to do nothing. Omar is basically a risk taker, whereas Kumba tries to avoid risk.

a) What type of decision procedure should Omar use? What would Omar's decision be?

b) What type of decision maker is Kumba? What decision would Kumba make?

c) If Omar and Kumba were indifferent to risk, what type of decision approach

should they use? What would you recommend if this were the case?