Telecomp is a U.S.-based manufacturer of cellular telephones. It is planning to

Question

Telecomp is a U.S.-based manufacturer of cellular telephones. It is planning to build a new manufacturing and distribution facility in either South Korea, China, Taiwan, Poland, or Mexico. The cost of the facility will differ between countries and will even vary within countries depending on the economic and political climate, including monetary exchange rates. The company has estimated the facility costin S millions) in each country under three different future economic/political climates as follows. Economic/Political Climate Coun South Korea China Taiwan Poland Mexico Decline 21.7 19.0 19.2 22.5 25.0 Improve 15.2 17.6 14.9 13.8 12.5 Same 19.1 17.1 16.8 21.2 Determine the best decision using the following decision criteria. (Note that since the payoff is cost, the maximax criteria becomes minimin and maximin becomes minimax.) a. Minimin b. Minimax C. Hurwicz ( =0.40) d. Equal likelihood

Explanation / Answer

a) Minimin = Mexico since 12.5 is the lowest possible number

b) Minimax - CHina because the maximum number 19.0 is the minimum across the three

c)

Hurwicz- Taiwan should be used

Equal likelihood- Taiwan should be used

Hurwicz Equal likelihood South Korea 21.7 19.1 15.2 17.8 18.66667 China 19 18.5 17.6 18.16 18.36667 Taiwan 19.2 17.1 14.9 16.62 17.06667 Poland 22.5 16.8 13.8 17.28 17.7 Mexico 25 21.2 12.5 17.5 19.56667

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