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Management at Washington Hospital Center is thinking about two investments. One is an MRI machine, which can make $100,000 in good economic conditions or $60,000 in bad economic conditions. Another is a CT scanner, which can make $150,000 in good economic conditions or $10,000 in bad economic conditions. Thus the decision depends on the economic conditions. What is the probability of good economic conditions that equates the two investments?
a. Develop a payo? table for this situation.
b. Find the following:
1. Maximax
2. Maximin
3. Equal likelihood
4. Minima regret
c. Create a sensitivity graph comparing the deferent alternatives as the probability of economic conditions changes.
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