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    A problem on decision analysis

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    2. The local operations manager for the IRS must decide whether to hire 1, 2, or 3 temporary workers. He estimates that net revenues will vary with how well taxpayers comply with the new tax code.

    # of Workers Low
    Compliance Medium Compliance High
    Compliance
    1 50 50 50
    2 100 60 20
    3 150 70 -10

    a. If he uses the maximin criterion, how many new workers will he hire?

    b. If he uses the maximax criterion, how many new workers will he hire?

    c. If he uses the minimax regret criterion, how many new workers will he hire?

    d. If he thinks the chances of low, medium, and high compliance are 20%, 30%, and 50% respectively, what are the expected net revenues for the number of workers he will decide to hire?

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