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Using the MAXIMAX method, which decision alternative will you chose?

a) Sell company

b) Form joint venture

c) Sell software on own


Success

Moderate Success

Failure

Sell Company

200

200

180

Form Joint Venture

300

291.00

-100

Sell Software on own

515.00

333

-220

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#6
Using the MAXIMIN method, which decision alternative will you chose?

1 answer

To apply the MAXIMAX method, we will identify the maximum payoff for each decision alternative and then choose the alternative with the highest maximum payoff.

Payoffs:

  • Sell Company:

    • Success: 200
    • Moderate Success: 200
    • Failure: 180
    • Max Payoff: 200

  • Form Joint Venture:

    • Success: 300
    • Moderate Success: 291
    • Failure: -100
    • Max Payoff: 300

  • Sell Software on Own:

    • Success: 515
    • Moderate Success: 333
    • Failure: -220
    • Max Payoff: 515

Now, we will compare the maximum payoffs:

  • Sell Company: 200
  • Form Joint Venture: 300
  • Sell Software on Own: 515

The highest maximum payoff is from Sell Software on Own (515).

Therefore, using the MAXIMAX method, the decision alternative to choose is:
Sell Software on Own.