Question

A decision-maker using the maximax criterion on the problem below would choose Alternative ________ because the criterion value is ___________.

	States of nature
	1	2	3
Alternative A	50	55	60
Alternative B	30	50	80
Alternative C	70	80	70
Alternative D	-100	-10	140

            a.         A; 60               b. B; 80          c. C; 70           d. D; -100     e. D; 140

Answer 1

Solution:

In maximax criterion, the maximum of the row maximums will be chosen by the decision-maker.

Using the maximax criterion, the given alternatives A, B, C and D are evaluated as below:

Answer: (E) D; 140

Alternative D with criterion Value of 140.