The manager is deciding whether or not to create the small facility. Demand is not sure and can be either at the high or low level. If manager selects a small facility and demand is low, payoff is $100. If manager selects the small facility and demand is high, payoff is $300. On the other hand, if manager selects the large facility and demand is low, payoff is -$200, but if demand is high, payoff is $800.
i) Find best decision based on Laplace criterion?
ii) Find best decision based on Hurwicz's criterion of realism by using = 0.6?