Assignment:
The expected savings in equipment maintenance costs for three different policies of preventive maintenance (PM1, PM2, and PM3) and three levels of operation of the equipment are shown:
Operation Level 1 Operation Level 2 Operation Level 3
PM1 $60,000 $75,000 $20,000
PM2 $50,000 $75,000 $80,000
PM3 $90,000 $60,000 $60,000
Q1. Which preventative maintenance policy should be chosen under the Laplace Principle?
Q2. Which policy should be chosen under the maximin rule?
Q3. Which alternative should be chosen under the Hurwicz rule with a = 0.8?
Provide complete and step by step solution for the question and show calculations and use formulas.