The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, moderate, or high, as follows:
a. If he uses the maximin criterion, which size bus will he decide to purchase?
b. If he uses the minimax regret criterion, which size bus will he decide to purchase?
c. If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, which size bus will he decide to purchase and what is the expected annual profit for this option?
|
Bus
|
Demand
|
Demand
|
Demand
|
|
|
Low
|
Medium
|
High
|
|
Small
|
50
|
60
|
70
|
|
Medium
|
40
|
80
|
90
|
|
Large
|
20
|
50
|
120
|