The prospective operator of a shoe store has the opportunity to locate in an established and successful shopping center. Alternatively, at lower cost, he can locate in a new center. whose development has recently been completed. If the new center turns out to be very successful, it is expected that annual store profits from location in it would be $130,000. If the center is only moderately successful, annual profits would be $60,000. If the new cen- ter is unsuccessful, an annual loss of $10,000 would be expected. The profits to be ex- pected from location in the established center will also depend to some extent on the de- gree of success of the new center, as potential customers may be drawn to it. If the new center were to be unsuccessful, annual profit for the shoe store located in the established center would be expected to be $90,000. However, if the new center were moderately suc- cessful, this expected profit would be $70,000, while it would be $30,000 if the new center turned out to be very successful.

(a) Set up the payoff table for the decision-making problem of this shoe store operator.

(b) Which action is chosen by the maximin criterion?

(e) Which action is chosen by the minimax regret criterion?