A steel manufacturing company is concerned with the possibility of a strike. It will cost
an extra 20,000 to acquire an adequate stockpile: If there is a strike and the company has not
stockpiled mangement estimates an additional expense of rs 60,000 on account of lost sales.
Should the company stockpile or not if it is no use....
Optimistic criterion ,Wald criterion Savage criterion,Hurwicz criterion for alpha =0.4 ,laplace criteriori?
Answers
Answer:
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Answer:
Therefore, the company should stockpile and the associated cost is 20,000.
Explanation:
Given,
For strike S1 :
Stockpile A1 20000
Do not stockpile A2 60000
For no strike S2:
Stockpile A1 20000
Do not stockpile A2 0
(1) Optimistic Criterion: Here, option A1's minimum is 20,000, while A2's minimum is 0.
As a result, the corporation should choose option A2, which means that the cost of doing so is zero.
(2) Wald Criterion:
The minimax criterion will be applied Maximum for options A1 and A2 are 20,000 and 60,000.
The corporation should choose option A1, which entails stockpiling at a cost of $20,000.
(3) Savage Criterion (Minimax Regret Criterion):
For S1-row regret, the minimum cost will be 20,000; for S2-row regret, the minimum cost will be O.
(4) Hurwicz Criterion (Weighted Average Criterion):
For a = 0.4, the cost of A 1 is Rs (20000 * 0.4 + 20000 * 0.6), cost of A 2 is Rs (60000 * 0.4 + 0 * 0.6), cost of A 2 is Rs (24,000).The corporation needs to stockpile, which would cost them Rs 20,000.
(5) Laplace Criterion (Equal Probability Criterion):
Equal probability cost for A1 is 1/2(20,000 + 20,000), or Rs. 20,000; equal probability cost for option A 2 = Rs 1/2 (60000 + 0) = Rs ,30,000.
As a result, the corporation ought to stockpile; the cost is Rs 20,000.
To learn more about Minimax Regret Criterion, visit:
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