Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 37

In Problem, the director of career advising at Orange Community College has paid a small fee to a local investment firm to indicate a probability for each future economic condition over the next 5 years. The firm estimates that there is a.20 probability of a recession, a.40 probability that the economy will be average, a.30 probability that the economy will be good, and a.10 probability that it will be robust. Using expected value determine the best degree program in terms of projected income. If you were the director of career advising, which degree program would you recommend
Problem
The director of career advising at Orange Community College wants to use decision analysis to provide information to help students decide which 2-year degree program they should pursue. The director has set up the following payoff table for six of the most popular and successful degree programs at OCC that shows the estimated 5-year gross income ($) from each degree for four future economic conditions:
Determine the best degree program in terms of projected income, using the following decision criteria:
a. Maximax
b. Maximin
c. Equal likelihood
d. Hurwicz ( =.50)