maximax decision rule

determine how many skis to order for the upcoming winter season by answering the questions
below. The manufacturer will take orders only for multiples of 20. Assume the demand/costing information
provided is accurate for the upcoming season.
a. Construct a payoff matrix.
b. What decision should be made according to the maximax decision rule?
c. What decision should be made according to the maximin decision rule?
d. What decision should be made according to the EMV decision rule?
e. What decision should be made according to the minimax regret decision rule?
f. What decision should be made according to the EOL decision rule?
g. How much should Charlie be willing to pay to obtain a forecast of customer demand that is 100%
accurate?
h. Which decision rule would you recommend Charlie use? Provide a clear explanation why you are
recommending a particular decision rule.
a) Develop a decision tree for the City of Vancouver given the information above. Draw this decision tree by
hand and evaluate it using the EMV decision criterion. Provide a concluding statement with respect to the
optimal decision.
b) Use Treeplan.xla to evaluate the decision tree in part a). Print out your decision tree and include it with
your submission.
c) Would the optimal decision change if the pilot program only costs the city $35,000? If so, provide a
concluding statement with respect to the new optimal decision.