Question

Practice Computational Problems Problem 1: A manufacturing firm is considering three potential strategies for the upcoming year. The possible payoffs for these strategies will vary according to demand as follows: a) Which strategy is best according to the maximax criterion?

Answer 1

The best strategy according to the maximax criterion is the one with the highest potential payoff.

Step-by-step explanation:

The maximax criterion is a decision-making approach that focuses on maximizing the maximum potential outcome. In the given scenario, the manufacturing firm is considering three potential strategies with varying payoffs based on demand. To determine the best strategy according to the maximax criterion, the firm would choose the strategy with the highest potential payoff. The firm would select the strategy that offers the highest possible outcome in the most favorable demand scenario.