Instructions

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Discuss the need and utility of statistical quality control in business decision-making. What are its limitations?

The following is a payoff (in $000) table for three strategies and two states of nature for our company:

Strategy

States of Nature

N1

N2

S1

40

60

S2

10

-20

S3

-40

150

Select a strategy using each of the following decision criteria: (a) Maximax, (b) Minimax regret, (c) Maximin, (d) Minimum risk, assuming equiprobable states.