A Max ( , , , )= ஃ Action A4 is the best. Example . A business man has three alternatives open to him each of which can be followed by any of the four possible events. The conditional pay offs for each action - event combination are given below: Alternative Pay–offs (Conditional events) – Y – – Z Determine which alternative should the businessman choose, if he adopts the maximin principle.
Alternative Pay – offs (Conditional events) Minimum pay off – – Y – – – Z Max (– ,– , ) = . Since the maximum payoff is , the alternative Z is selected by the businessman. Example . Consider the following pay-off matrix.
Alternative Pay – offs (Conditional events) A A A A E E E E XII Std - Business Maths & Stat EM Chapter - - Using minmax principle, determine the best alternative. Alternative Pay-offs (Conditional events) Maximum pay off A A A A E E E E min( , , , ) = . Since the minimum cost is , the best alternative is E according to minimax principle. Exercise .
. Given the following pay-off matrix(in rupees) for three strategies and two states of nature. Strategy States-of-nature E E S S – S – Select a strategy using each of the following rule (i) Maximin (ii) Minimax. .
A farmer wants to decide which of the three crops he should plant on his -acre farm. The profit from each is dependent on the rainfall during the growing season. The farmer has categorized the amount of rainfall as high medium and low. His estimated profit for each is shown in the table.
Rainfall Estimated Conditional Profit(Rs.) Crop A Crop B Crop C High Medium Low If the