question archive Debre Birhan Blanket Factory is in a dilemma whether to expand the present plant, build new plant or subcontract with other companies for further production
Debre Birhan Blanket Factory is in a dilemma whether to expand the present plant, build new plant or subcontract with other companies for further production
Subject:Operations ManagementPrice: Bought3
Debre Birhan Blanket Factory is in a dilemma whether to expand the present plant, build new plant or subcontract with other companies for further production. The objective of the factory is to choose among the three alternatives that would provide the maximum profit giving the uncertainty concerning the demand for the products. Given the following payoff table for Debre Birhan Blanket Factory (profit in million dollars).
Discussion States of nature
alternatives Strong DD (?1) Weak DD (S2)
Eexpansion 10 4
New plant 15 7
Subcontracting 20 3
Instruction: Answer the following question based on the above information given
A. Calculate which alternative will be chosen using the Maxi-Max decision criteria
B. Compute which alternative will be chosen if the above given payoff table were costs using Maxi-Min decision criteria
C. Determine which alternative will be chosen using Mini-Max regret decision criteria
