Question

1. An insurance company is planning to launch three life insurance policies namely: Standards (s), Preferred (p) and Ultra- Preferred (u). The Manager presents the following information with four scenarios of selling prices and the future profits for each product under the four scenarios:

	Future Profits
	Selling Price	K2	K3	K4	K5
Product :
Standard(S)		1180	1090	960	892
Preferred(P)		1200	1104	918	838
Ultra - Preferred (u)		1320	1152	960	648
Probability		0.2	0.3	0.3	0.2

What would be the managers decisions based on

1. Mamimin criterion selling price of K5
2. Maximax Criterion selling price of k2

Minimax regret criterion

Answer 1

I'YOTIV Priu K 2 ヒS K 3 Produce q60 Standard (S) ft&O 8 38 9t8 Prefevrel C) 2co 648 CNtva 3 20 PreFered (up) steps Maximin riferion (り Fr each product find minimum profit Min K S pnfi K 3 K 2 fricu Prduct hオ 242 040 180 P3a 38 1104 CP) 1200 648 648 a60 tISL CUP) I320 min. profit Frm Column 6f ris) valw +har pair MaximuM of pric and product is preferred that i ddecicion nada the 892 Stondard A Pmduct Price is Ks" wauld

Maximox Criferion Similar to Maximin criferfon choose highert possifk profit fer each Pwduct Maximun Profit 7&O 00て」 V P 1320 above colun again choose From MaxiMuN Valu valu MaximuM 1320 under Maximax citerion Decision MAd 4 K2 Price Ultra pre ferret A i s Critenon Minimax resvet Regret thu diffevence between Mears moct Favural outcome. outcome and Yealised FAr further fo11owing Matrix Ne need analysis

Ninimax regree AIways deduct Maximur Minimur Pice Product veluaj Value K 2 K 3 K 4 KS S-10-1320 -(040- 12) -960-q6c -41- 249 -200-1320) -(1104-11) -18-960-38- ra2j p UP- (220-1320)-(52-1152) - 6 60-9c0-6us- 3q4 Neximun raye Yeevee K4 K 3 K2 O +140 + 62 140 2 O S4 +120 + 48 Up 244 +244 NGXiMuM regree of col4mn f lasf out fram thi's MinimunM set valu needd 三ル0 MinCi40, 120, 244) Premium A> per Minimex Yesvet from dedsilon Mad choiu +he
.