A manager has learned that annual profits from four alternatives being considered for solving a capacity problem are projected to be $15,000 for A, $30,000 for B, $45,000 for C, and $60,000 for D if state of nature 1 occurs; and $60,000 for A, $80,000 for B, $90,000 for C, and $35,000 for D if state of nature 2 occurs.

(A) Assuming maximax is used, what alternative would be chosen?

(B) Assuming maximin is used, what alternative would be chosen?

(C) Assuming Laplace is used, what alternative would be chosen?

(D) If the probability of Nature 1 is .40 and the probability of Nature 2 is 0.6, which alternative should be chosen?

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