What is the best decision under the maximax criterion? What is the best decision under the maximin criterion? What is the best decision under the minimax regret criterion? What is the best decision under the expected payoff criterion?
Critical Path Method
The critical path is the longest succession of tasks that has to be successfully completed to conclude a project entirely. The tasks involved in the sequence are called critical activities, as any task getting delayed will result in the whole project getting delayed. To determine the time duration of a project, the critical path has to be identified. The critical path method or CPM is used by project managers to evaluate the least amount of time required to finish each task with the least amount of delay.
Cost Analysis
The entire idea of cost of production or definition of production cost is applied corresponding or we can say that it is related to investment or money cost. Money cost or investment refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factor of production or factor services.
Inventory Management
Inventory management is the process or system of handling all the goods that an organization owns. In simpler terms, inventory management deals with how a company orders, stores, and uses its goods.
Project Management
Project Management is all about management and optimum utilization of the resources in the best possible manner to develop the software as per the requirement of the client. Here the Project refers to the development of software to meet the end objective of the client by providing the required product or service within a specified Period of time and ensuring high quality. This can be done by managing all the available resources. In short, it can be defined as an application of knowledge, skills, tools, and techniques to meet the objective of the Project. It is the duty of a Project Manager to achieve the objective of the Project as per the specifications given by the client.
System Options. JR Davidson recently started a practice in Landscape Design and is considering the purchase of an automated drafting system. JR can purchase a system with three possible drafting capacities. The payoffs for having any of these systems depend on the demand for drafting services over the next few years. The costs for each system are shown as follows along with JR’s assessment of the probabilities that demand will match the capacity of each one.
|
Total Cost |
Probability |
|
|
Small system |
$11,000 |
0.29 |
|
Medium system |
$14,000 |
0.22 |
|
Large system |
$20,000 |
0.49 |
Working at capacity, each system would generate net cash flow at a yearly rate of 50% of its total cost. If a system is chosen that is smaller than demand, it would work at capacity. If a system is chosen that is larger than demand, revenue from the system would be limited by demand. For convenience, JR has initially decided to count cash flow for three years, without discounting. For example, if JR chooses the Medium system and demand is Small, then the profit is calculated as follows:
Profit = 3*(0.5 x 11,000) – 14,000 = $2500
- What is the best decision under the maximax criterion?
- What is the best decision under the maximin criterion?
- What is the best decision under the minimax regret criterion?
- What is the best decision under the expected payoff criterion?
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