The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, moderate, or high, as follows: Bus DEMAND LOW MEDIUM HIGH Small 50 60 70 Medium 40 80 90 Large 20 50 120 a). If he uses the maximin criterion, which size bus will he decide to purchase?
b). If he uses the minimax regret criterion, which size bus will he decide to purchase?
c). If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what is the expected annual profit for the bus that he will decide to purchase?
d). If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what is his expected value of perfect information?