Details Regarding Decision Analysis
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2. The owner of the Charleston Construction Company must decide between building a housing development, constructing a shopping center, and leasing all the company's equipment to another company. The profit that will result from each alternative will be determined by whether material costs remain stable or increase. The profit from each alternative, given the two possibilities for material costs, is shown in the following payoff table:
Material Costs
Decision Stable Increase
Houses $70,000 $30,000
Shopping center 105,000 20,000
Leasing 40,000 40,000
a. Maximax
b. Maximin
c. Minimax Regret
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Solution Summary
Excel file contains analysis of the payoff able and recommend what the owner of construction company should build under maximax, minimax and maximin regret.
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