Question:
1. Even though independent gasoline stations have been having a difficult time, Susan Solomon has been thinking about starting her own independent gas station. Susan's problem is to decide how large her station should be. The annual returns will depend on both the size of the station and a number of marketing factors related to oil industry and demand for gasoline. After careful analysis, Susan developed the following table:
|
Size of Gasoline Station
|
Good Market ($)
|
Fair Market ($)
|
Poor Market ($)
|
|
Small
|
$5,000
|
$2500
|
-$1000
|
|
Medium
|
$10,000
|
$7000
|
-$5,000
|
|
Large
|
$25,000
|
$12,500
|
-$20,000
|
You may use Excel QM or QM for Windows:
1. What is the Maximax decision?
Explanation (include software output or calculation):
2. What is the Maximin decision?
Explanation (include software output or calculation):
3. What is the criterion of realism decision? Use α = 0.25.
Explanation (include software output or calculation):
4. Develop an Opportunity Loss Table.
5. What is the Minimax Regret Decision?
Explanation (include software output or calculation)