Find the best investment using maximax and maximin

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Reference no: EM1319999

Question: A local real estate investor in Orlando is considering three alternative investments: a motel, a restaurant, or a theater. Profits from the motel or restaurant will be affected by the availability of gasoline & the number of tourists; profits from the theater will be relatively stable under any conditions. The following payoff table shows the profit or loss that could result from each investment:

Investment

 

Gasoline Availability

 

Shortage

Stable Supply

Surplus

Motel

-$8,000

$15,000

$20,000

Restaurant

2,000

8,000

6,000

Theater

6,000

6,000

5,000

Find the best investment, using the following decision criteria.

[A] Minimax regret
[B] Hurwicz [alpha = .4]
[C] Equal likelihood
[D] Maximax
[E] Maximin

 

 

Reference no: EM1319999

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