Questions:
Decision Making and Quantitative Methods
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 and 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 Shortage Stable Supply Surplus
MOTEL $-8,000 $15,000 $20,000
RESTAURANT 2,000 $8,000 $6,000
THEATHER 6,000 6,000 5,000
Determine the best investment , using the following decision criteria
A. Maximax
B. Maximin
C. Minimax regret
D. Hurwicz (a=.4)
E. Equal likelihood