Questions 14-20

Refer to the information above. a. Which alternative should be chosen based on the maximax criterion? b. Which alternative should be chosen based on the maximin criterion? c. Which alternative should be chosen based on the Lapalce criterion? d. Which alternative should be chosen based on criterion of realism with alpha = 0.7? c. Which alternative should be chosen based on the minimax regret criterion? A plant manager is considering buying additional stamping machines to accommodate increasing demand the alternatives are to buy 1 machine, 2 machines, or 3 machines. The profits realized under each alternative are a function of whether their bid for a recent defense contract is accepted or not. The payoff table below illustrates the profits realized (in $000's) based on the different scenarios faced by the manager. Refer to the information above. a. Which alternative should he chosen based on the maximax criterion? b. Which alternative should be chosen based on the maximin criterion? c. Which alternative should be chosen based on the Lapalce criterion? d. Which alternative should be chosen based on criterion of realism with alpha = 0.8? c. Which alternative should be chosen based on the minimax regret criterion? Which of the following statements concerning decision trees is FALSE? A) Decision nodes are represented by a square. B) Outcome nodes are represented by a circle. C) EMV is calculated at each outcome. D) The alternative is chosen with the highest EMV. E) Decision trees are solved by starting at the first decision node and moving forward. The EMV that a person is willing to give up in order to avoid the risk associated with a gamble is referred to as the ______. A) risk premium B) certainty equivalent C) EVPI D) E) EVSI The maximin criterion approach selects the "best of the wont." True or False