MGT613 ASSIGNMENT NO 1 SOLUTION

Maximin
Maximin determines the worst payoff for each alternative; the operations manager chooses the best
worst alternative. Meaning the least (best) of the worst.
It is a pessimistic approach.
Ensures a guaranteed minimum.
Maximax
Maximax determines
the best possible outcome
Choose the Alternative with the best possible payoff.
It does not take into account any other alternative then the best payoff.
An optimistic approach.
Go for it strategy.
Laplace
Determines the Average payoff for each alternative
And chooses the alternative with the best average.
This is a cautious approach
Laplace approach treats the states of nature as equally likely.


POSSIBLE FUTURE DEMANDS
Alternatives Low Moderate High
Road S Rs. 40 M Rs. 40 M Rs 50 M
Road M Rs. 55 M Rs.60 M Rs 75 M
Road D Rs. 30 M Rs 55 M Rs 85 M

Maximin
Maximin determines the worst payoff for each alternative; the operations manager chooses the best



POSSIBLE FUTURE DEMANDS
Alternatives Low Moderate High Maximin
Road S Rs. 40 M Rs. 40 M Rs 50 M Rs. 40 M
Road M Rs. 55 M Rs.60 M Rs 75 M Rs. 55 M
Road D Rs. 30 M Rs 55 M Rs 85 M Rs. 30 M

Maximax
Maximax determines
the best possible outcome
Choose the Alternative with the best possible payoff

POSSIBLE FUTURE DEMANDS
Alternatives Low Moderate High Maximax
Road S Rs. 40 M Rs. 40 M Rs 50 M Rs 50 M
Road M Rs. 55 M Rs.60 M Rs 75 M Rs 75 M
Road D Rs. 30 M Rs 55 M Rs 85 M Rs 85 M
Minimax Regret

Low 55
Moderate 60
High 85



Alternatives Low Moderate High
Road S 40-55 = -15 40-60 = -20 40-85 = -35
Road M 55-55 = 0 60-60 = 0 75-85 = -10
Road D 30-55 = -25 55-60 = -5 85-85 = 0



Lplace

POSSIBLE FUTURE DEMANDS
Alternatives Low Moderate High Lplace
Road S Rs. 40 M Rs. 40 M Rs 50 M 130/3 = 43.33
Road M Rs. 55 M Rs.60 M Rs 75 M 190/3 = 63.33
Road D Rs. 30 M Rs 55 M Rs 85 M 170/3 = 56.66