Steve’s Mountain Bicycle Shop is considering three options for its facility next year. Steve can expand his current shop, move to a larger facility, or make no change. With a good market, the annual payoff would be $76,000 if he expands, $90,000 if he moves, and $40,000 if he does nothing. With an average market, his payoffs will be $30,000, $41,000, and $15,000, respectively. With a poor market, his payoff will be –$17,000, – $28,000, and $4,000, respectively. This assignment will explore Maximax, Minimax, and Maximin using this scenario for Steve’s Mountain Bicycle Shop.
Instructions:
• Create an Excel Document that shows which options Steve should pick in each of the below situations:
o Maximax, o Maximin, o Equally likely, o Option if Steve uses criterion of realism at α = 0.4 (Hurwicz), o Minimax
• The table(s) should be clearly presented and labeled. It should include information on the possible outcomes as well as the best choice in each of the above listed.
• You may be creative in the presentation, so test your formatting skills!
Steve’s Mountain Bicycle Shop
Evaluation Rubric for Steve’s Mountain Bicycle Shop Assignment
CRITERIA Deficient Needs Improvement
Proficient Exemplary
(0-35 Points) (36-47 Points) (48-59 Points) (60 Points) Maximax/Maxim in/Equally Likely/Minimax
Missing, or incomplete.
Complete but showing inaccurate data.
