FALL2022

Assignment No.1
Production/Operations Management - MGT613

Solution:
1)
Maximin selects the best alternative from available worst payoffs. The worst payoffs for the
alternatives are below:
Small Facility 30,000
Medium Facility 24,000
Large Facility (8000)

Out of the available worst available payoffs, small facility i.e. 30,000 would be the Maximin
strategy.

2)
Using maximax, the best payoffs for all alternatives are listed:
Small Facility 30,000
Medium Facility 34,000
Large Facility 42,000

Maximax denotes the best possible payoff, which is 42,000 in third row so the maximax
approach will go for the large facility.

3)
In Laplace, we will find the average by dividing row total by no. of available states of nature:

Small Facility 90,000 30,000

Medium Facility 92,000 30,666
 Large Facility 42,000 14,000

From above calculations, it is evident that the highest average is 30,666, So Medium Facility
would be chosen under the Laplace criterion.
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