Problem:
Telecomp is a U.S.-based manufacturer of cellular telephones. It is planning to build a new manufacturing and distribution facility in 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 cost (in $ millions) in each country under three different future economic/political climates as follows.
|
|
Economic/Political Climate
|
|
|
Country
|
Decline
|
Same
|
Improve
|
|
South Korea
|
21.7
|
19.1
|
15.2
|
|
China
|
19.0
|
18.5
|
17.6
|
|
Taiwan
|
19.2
|
17.1
|
14.9
|
|
Poland
|
22.5
|
16.8
|
13.8
|
|
Mexico
|
25.0
|
21.2
|
12.5
|
Required:
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