A company that is introducing a new product has to choose between four different manufacturing methods, referred to as methods A, B, C and D
Depending on the demand for the product, they have forecasted different levels of expenses for the year (values are in thousands). The company has identified three possible states of nature for economic growth, and named them High, Medium, and low. Which alternative is best in accordance with an optimistic outlook? Which alternative is best according to a pessimist?
High Medium Low
Method A $450 $670 $780
Method B $950 $320 $200
Method C $375 $575 $775
Method D $800 $400 $300
The optimistic outlook is Method B; the pessimistic outlook is Method C; the equally likely perspective is Method B; the minimax regret choice is Method C.
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