The candy bar manufacturer has three admissible actions processes A. B. and C. When these are considered
Question:
The candy bar manufacturer has three admissible actions processes A. B. and C. When these are considered together, process B is chosen by the minimax regret criterion. Suppose now that a fourth admissible alternative, production process E. is available. Estimated payoffs for this action are $60,000 under low demand, S115.000 for moderate demand. and $220,000 for high demand. Show that when production processes A. B. C. and E are considered together, process A is chosen by the minimax regret criterion. Thus, while adding process E to the available actions does not result in the selection of that process, it does lead to the choice of a different action than would otherwise have been the case. Comment on the intuitive appeal of the minimax regret criterion in light of this example.
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