Fancyfree Products has received a low-rate industrial loan
Fancyfree Products has received a low-rate industrial loan to enable it to build a
manufacturing plant in an economically depressed area. Effects of future economic and political conditions
influence the site selection. As a preliminary study of the situation, ratings have been assigned as outcomes
for operating the plant at each site under each of the more likely future conditions:
Possible conditions
Site 1 2 3 4 NW
NE
SW
SE
C 0
4
16
4
4 2
14
6
4
14 8
12
6
18
10 20
10
8
6
9 (a) Which site is dominated? (Dominance refers to the condition where one alternative produces greater
payoff than another alternative for every future condition.)
(b) Which site is preferred according to the maximin criterion?
(c) Which site is preferred according to the maximax criterion?
(d) Which site gets a preference when the equal-likelihood principle is applied?
(e) When ? = 0.75, which site has the highest rating by the Hurwicz principle?
(f) Which site is preferred according to the regret principle?

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