Computer science
i2u2me
8-1.xls8-1A Formula View
| Thompson Lumber (Dec Making Under Uncertainty) | |||||||
| PAYOFFS | Outcomes | Maximax | Maximin | ||||
| Alternatives | High demand | Moderate demand | Low demand | Max payoff | Choice | Min payoff | Choice |
| Large plant | $200,000 | $100,000 | -$120,000 | $200,000 | Best | -$120,000 | 0 |
| Small plant | $90,000 | $50,000 | -$20,000 | $90,000 | 0 | -$20,000 | 0 |
| No plant | $0 | $0 | $0 | $0 | 0 | $0 | Best |
| PAYOFFS | Outcomes | Hurwicz | Equally likely | ||||
| Alternatives | Good market | Fair market | Poor market | Realism payoff | Choice | Average payoff | Choice |
| Large plant | $200,000 | $100,000 | -$120,000 | $24,000 | 0 | $60,000 | Best |
| Small plant | $90,000 | $50,000 | -$20,000 | $29,500 | Best | $40,000 | 0 |
| No plant | $0 | $0 | $0 | $0 | 0 | $0 | 0 |
| a = | 0.45 | ||||||
| REGRET | Outcomes | Minimax | |||||
| Alternatives | High demand | Moderate demand | Low demand | Max regret | Choice | ||
| Large plant | $0 | $0 | $120,000 | $120,000 | 0 | ||
| Small plant | $110,000 | $50,000 | $20,000 | $110,000 | Best | ||
| No plant | $200,000 | $100,000 | $0 | $200,000 | 0 |
Identifies maximum payoff
IF function is used to identify the best alternative.
Identifies minimum payoff
AVERAGE function is used to calculate equally likely payoffs.
= a * maximum payoff + (1-a) * minimum payoff
Identifies maximum regret
Formula to calculate regret value
8-1B
| Thompson Lumber (Dec Making Under Uncertainty) | |||||||
| PAYOFFS | Outcomes | Maximax | Maximin | ||||
| Alternatives | High demand | Moderate demand | Low demand | Max payoff | Choice | Min payoff | Choice |
| Large plant | $200,000 | $100,000 | -$120,000 | $200,000 | Best | -$120,000 | 0 |
| Small plant | $90,000 | $50,000 | -$20,000 | $90,000 | 0 | -$20,000 | 0 |
| No plant | $0 | $0 | $0 | $0 | 0 | $0 | Best |
| PAYOFFS | Outcomes | Hurwicz | Equally likely | ||||
| Alternatives | High demand | Moderate demand | Low demand | Realism payoff | Choice | Average payoff | Choice |
| Large plant | $200,000 | $100,000 | -$120,000 | $24,000 | 0 | $60,000 | Best |
| Small plant | $90,000 | $50,000 | -$20,000 | $29,500 | Best | $40,000 | 0 |
| No plant | $0 | $0 | $0 | $0 | 0 | $0 | 0 |
| a = | 0.45 | ||||||
| REGRET | Outcomes | Minimax | |||||
| Alternatives | High demand | Moderate demand | Low demand | Max regret | Choice | ||
| Large plant | $0 | $0 | $120,000 | $120,000 | 0 | ||
| Small plant | $110,000 | $50,000 | $20,000 | $110,000 | Best | ||
| No plant | $200,000 | $100,000 | $0 | $200,000 | 0 |
Best alternative for maximin criterion
Coefficient of realism
Regret table computed from payoff table
Best alternative for minimax regret criterion
