Question: A small business decided to expand into one of two cities, A and B. The primary factor which will determine which of the two to move to is which city has the lower local property taxes. Such taxes are determined by the size of the outlet. Tax amounts are in thousands of dollars.

OUTLET SIZE

Small Medium

City \[{{s}_{1}}\] \[{{s}_{2}}\] \[{{s}_{3}}\]

City A \[{{d}_{1}}\] 35 34 39

City B \[{{d}_{2}}\] 33 36 40

1. Use the optimistic method to determine the best location. (6 points)
2. Use the conservative method to determine the best location. (6 points)
3. Use the minimum/maximum regret method to determine the best location. (8 points)

d) Suppose \[P({{s}_{1}})=0.32{{,}_{{}}}P({{s}_{2}})=0.38,\] and \[P({{s}_{3}})=0.30\] .

Use the expected value method to determine the best location. (10 points)

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