3State Conservative Approach by Kingsley&Joy

 CONSERVATIVE/PESSIMISTIC APPROACH MAXMINI

This equation is used to solve a  three (3) state of nature decision analysis. The pessimistic approach first gets the minimum or worse payoff then the maximum of all the minimum, not clear? check out the example below

EXAMPLE

Given the Following

                     S1       S2        S3

Action                                                             MIN                  MAX

D1              60          25         30                      25

D2              30          75         43                      30                     30                  

D3              40          10         90                     10                                     

D2 is the best option when using MaxMini approach

REFERENCES

Gichuhi, K J & Ndung'u, N D (2013) Quantitative Methods for Business Management : Decision Analysis and Trees. Nairobi : Finesse.

Investopedia (2015) Expected Value. Retrieved on 23rd March 2015 From : http://www.investopedia.com/terms/e/expected-value.asp