Question

Jo's Hash House has outgrown its small current facility. Jo - the owner - wants to see if she might be able to serve more customers by moving to a new facility. She has three top contenders: a small diner location that is about 25% bigger; a medium facility that is 50% larger; and a large facility that is 100% bigger. Her nephew has helped her estimate the state of the economy over the next five years. If she stays where she is now ("no new facility"), she will make the same amount that she would have no matter what the economy does. The attached table shows what she and her nephew think will happen to revenues based on the size of the new facility and the economy. Complete cells with the correct information.

Data	Secnario 1	Scenario 2	Scenario 3		Results
Sales Increases	Robust	Average	Recession		EMV	Minimum	Maximum
Probablilty	0.3	0.4	0.3
Large Facility	500000	250000	-175000
Medium Facility	350000	300000	-100000
Small Facility	125000	100000	-25000
No New Facility	0	0	0
				Maximum
Expected Value of Perfect Information				MINIMAX
Column Best				EMV
				MAXIMIN
				MAXIMAX
Regret
	Scenario 1	Scenario 2	Scenario 3		Expected	Maximum
Probability	0.3	0.4	0.3
Large
Medium
Small
No Facility
				Minimum
Your Advice:

Answer 1

Data	Secnario 1	Scenario 2	Scenario 3		Results
Sales Increases	Robust	Average	Recession		EMV	Minimum	Maximum
Probablilty	0.3	0.4	0.3
Large Facility	500000	250000	-175000		197500	-175000	500000
Medium Facility	350000	300000	-100000		195000	-100000	350000
Small Facility	125000	100000	-25000		70000	-25000	125000
No New Facility	0	0	0		0	0	0
				Maximum	197500	-175000	500000
Expected Value of Perfect Information		72500		MINIMAX	125000
Column Best	150000	120000	0	EMV	197500	Large
				MAXIMIN	0	No new facility
				MAXIMAX	500000	Large
Regret
	Scenario 1	Scenario 2	Scenario 3		Expected	Maximum
Probability	0.3	0.4	0.3
Large	0	50000	175000			175000
Medium	150000	0	100000			150000
Small	375000	200000	25000			375000
No Facility	500000	300000	0			500000
				Minimum		175000
Your Advice:				Large