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Even though independent gasoline stations have been having a difficult time, Susan Solomon has been thinking about starting her own independent gas station. Susan's problem is to decide how large her station should be. The annual returns will depend on both the size of the station and a number of marketing factors related to oil industry and demand for gasoline. After careful analysis, Susan developed the following table:
Size of Gasoline Station Good Market ($) Fair Market ($) Poor Market ($)Small $50,000 $20,000 -$10,000Medium $80,000 $30,000 -$20,000Large $100,000 $30,000 -$40,000Very Large $300,000 $25,000 -$160,000
a. Develop a decision table for this decision.b. What is the Maximax decision?c. What is the Maximin decision?d. What is the equally likely decision?e. What is the criterion of realism decision? Use a = 0.8.f. Develop an Opportunity Loss Tableg. What is the Minimax Regret Decision.
Test at the five percent level of significance
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