Q. Kenneth Brown is the principal of Brown Oil, Inc. After quitting his university teaching job, ken has been able to increase his yearly salary by a factor of over 100. At the present time, Ken his forced to consider purchasing some more equipment for Brown Oil because of competition. His alternatives are shown in the Subsequent table:

Equipment Favourable
market
($) Unfavourable
Market
($)
Sub 100 300,000 -200,000
Oil J 250,000 -100,000
Texan 75,000 -18,000

For example, if Ken purchases a Sub 100 and there is a favourable market, he will realize a profit of $300,000. On the other hand, if the market is unfavourable, Ken will suffer a loss of $200,000. But Ken has always been a very optimistic decision maker.

a. Illustrate what type of decision is Ken facing?

b. Illustrate what decision criterion should he use?

c. Illustrate what alternative is best?