Pavoff Table Scenario 3 Trips 5 Trips 12 Trips 15 Trips 18 Trips Rent Each ri 30

Question

Pavoff Table Scenario 3 Trips 5 Trips 12 Trips 15 Trips 18 Trips Rent Each ri 300 -500 1200 -1500 -1800 Lease Per- 1575 -1625 1800 -1875 -1950 Season Buy equipment -2650 2650 2650 2650 2650 Which option should be used according to the MAXIMAX decision rule? Which option should be used according to the MAXIMIN decision rule? Which option should be used to maximize the EMV if there is an equally-likely criterion? Which option should be used to maximize the EMV using the probabilities shown in the table? (Ctrl-

Explanation / Answer

Maximin: It states that the decision maker should select the course of action whose worst (maximum) loss is better than the least (minimum) loss of all other courses of action possible in given circumstances.

Row minimus are as follows

-1800

-1950

-2650

Maximum of the above are -1800

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