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Laplace Criterion?  Minimax Regret?

Laplace Criterion?  Minimax Regret?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Niue Vanilla has had two successive years in which the Vanilla bean harvest has stretched the firm’s capacity within their drying sheds. Pita, the manger for the drying operation must now make a decision on capacity for next year. Estimated profits under each of the three possible states of nature are as shown in the table below, along with 3 possible alternatives he is considering: Do Nothing, Expand the Drying Shed operation, or Subcontract to a local farmer group who can do some of the drying

  1. Laplace Criterion? 

  2. Minimax Regret?

Next Year's Demand Low Medium Do nothing $50* $60 Expand $20 $40 Subcontract $40 $70 *Profit in $thousand Alternatives High $80 $50 $100
Transcribed Image Text:Next Year's Demand Low Medium Do nothing $50* $60 Expand $20 $40 Subcontract $40 $70 *Profit in $thousand Alternatives High $80 $50 $100
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