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The research department of Hindustan Ltd. has recommended paying the marketing department to launch a shampoo of three different types. The marketing types of shampoo to be launched under the following estimated pay-offs for various levels of sales.Types of ShampooEstimated Sales (in Units)15000100005000Egg Shampoo301010Clinic Shampoo40155Deluxe Shampoo55203What will be the marketing manager’s decision if (i) Maximin and (ii) Minimax principle applied? |
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Answer» (i) Maximin principle
Max (10, 5, 3) = 10. Since the maximum pay-off is 10 units, the marketing manager has to choose Egg shampoo by Maximin rule. (ii) Minimax principle
Min (30, 40, 55) = 30. Since the minimum pay-off is 30 units, the marketing manager has to choose Egg shampoo by minimax rule. |
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