Question

Your company, Alberta Ski Hills, has decided to add a new ski run for the next season and you have been provided with the table shown below. The decision is based on three possible states of snow fall during the ski season. The decision is between a basic (Bunny) slope, an intermediate slope and an expert slope. You have been asked to provide the following: (10) Develop a Decision table. a) What is the maximax decision? b) What is the maximin decision? c) What is the equally likely decision? d) Develop a decision tree. Find the EMV.

	States (thousands)
	More than 300 cm	Less than 300 cm, more than 200 cm	Less than 200 cm
Probability	.2	.5	.3
Basic	100	60	-10
Intermediate	200	50	-40
Experienced	300	40	-100

Answer 1

Alternative	low	moderate	high
basic	$100	$60	-$10
Intermediate	$200	$50	-$40
Experienced	$300	$40	-$100

Answer a: Maximax

Alternative	low	moderate	high	Best= max of the row	Best of the Best
basic	$100	$60	-$10	$100
Intermediate	$200	$50	-$40	$200
Experienced	$300	$40	-$100	$300	yes

Experience is the Maximax decision

Answer b: Maximin

Alternative	low	moderate	high	Worst= least of the row	Best of the Worst
basic	$100	$60	-$10	-$10	yes
Intermediate	$200	$50	-$40	-$40
Experienced	$300	$40	-$100	-$100

Basic is the Maximin decision

Answer c: Equally likely

Alternative	low	moderate	high	Average	best of Averages
basic	$100	$60	-$10	$50
Intermediate	$200	$50	-$40	$70
Experienced	$300	$40	-$100	$80	yes

Experienced is the Equally likely decision

Answer d: EV will be given as= value of its cell *probability for alternative

EV table	low	moderate	high	EMV= sum of EV
basic	$20	$30	-$3	$47.00
Intermediate	$40	$25	-$12	$53.00
Experienced	$60	$20	-$30	$50.00

Intermediate is the best EMV decision

Please ask, if you have any doubts through the comment section. Do rate the answer