Question

DECISION MAKING UNDER UNCERTAINT 4) A manufacturing company is considering three different polymeric materian its manufacturing processes and materials database. The conversion costs of a on processing costs per molding strength as shown below: Assume that HINT: It is absurd to maximize cost for a fixed revenue why not maxi aximize cost I, for a fixed revenue why not maximize the negative of cost? Ur minimize cost OR assume a fixed revenue of say $20 lbf across the board for any man of product A, B or C and find profits matriy by make which can subsequently be maximize according to the various criterion described below under A, B, C and D criterion ant polymeric materials A, B, and C to add to rsion costs of each make depends of product A, Bost OR assume art, for a fixed reven Note Goals is to Maximize Profit which is Revenue - Cost CostMolding Strength (NOTE: Revenue is $20/b) MODERATE MAKE LOW HIGH $ 8/Ibf $9/bf $10/1bf 6 12 14 A) Which material is the best according to the Maximax approach? B) Which material is the best according to the Maximin approach? C) Which material is the best according to the principle of insufficient reason the Laplace Criterion (I.e. in the absence of a definitive information on the probability associated with the possible states of nature, use the equal probability or likelihood criteria for decision making i.e. the Laplace Criterion, or the averaging criterion). D) Which material is the best according to the Minimax Regret approach?

Answer 1

Decision Making Undey Uncertanity ALTENATIVES Moderate 10 High Fone [Revenue $ 80lbs - which is constant D. According to Maximax Approach, It isaldo Called Optimistic approach] -> We have to find the best possible and which is morumu low odellen Moxximum Values 890 -> le 6 2 19 - 150g so the value 14 from product B, but when we have to maximiste the revenue then Revenue is = 30 Bopit - Revenue Cost A = 2.0 -0 =10 B = 90 - 19 = Marimum 6 L 96 - & 12 - Vorfit in Product C

So we are best going to chase the matesual 0 oduct C According to Maramin Approach it is also called Conservative Approach - In this past we have to find best of Worst. the So, ha Modenale High Worst values 12 14 6 c000 Foom 8, 6, 4 best value is 8. so the Koduct al. But from Revene x = 20 - 8 = 2 B = do - 6 = 14 C= 20 -4 = 116 Monimum of it in ho duct C from the maximin appogach

cording to Laplace Guitalen 151214 Laploce Criterion is finding the value fom total cost For A (8 +49 + (1 3-3 + 3+ 6 = 296 For B (6) + f (2) + 4 (4) - 2 + 4 + 4.6 = 1066 For C +10+ 4e +10 = 1-3 +26+3 = 6-96

But som Revenue B C b - 10:66 9:39 20 - 6-96 15.04 the best chose of product is all So According to Minimax Regne sa Premach It is also called Lobbantunity loss ] low Modestarte mich find the best value in one. Calum, lige from Low 8, 6, 4 B 8 -6 - 4 =2 = 4

Im Madestate B C 1212 12-8-54 From High = 10, 14, 9 BE11-19 = 0 19-9 - 5 C New Nodesta to Hloh Best Value 144 Mean hoducto So, the best is: 5 but som Revenue 10 = 30-4 16 B = - 3 = 18 -> C = 30-5=15 The Padid Bis giving HERE