Question

1. Ms. Ozturk, a marketing manager at Business X, has determined four possible strategies (X1, X2, X3, and X4) for promoting the Product X in Ankara. She also knows that major competitor Product Y has 4 competitive actions (Y1, Y2, Y3 and Y4) it’s using to promote its product in Ankara, too. Ms. Ozturk has no previous knowledge that would allow her to determine probabilities of success of any of the four strategies. She formulates the matrix below to show the various Business X strategies and the resulting profit, depending on the competitive action used by Business Y.(This questions subject : Principles Of Management)

Determine which strategy Ms.Ozturk should select using, the following decision criteria. Please explain your answer for each strategy.

1. Maximax; (10 pts)
2. Maximin; (10 pts)
3. Minimax regret(10 pts)

Business X Strategy                Business Y Strategy

	Y1	Y2	Y3	Y4
X1	25	57	21	26
X2	17	29	20	34
X3	47	31	32	37
X4	35	27	30	35

Answer 1

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a) Maximax

for business Y strategy

maximum of Y column is 47, 57, 32, 37

maximum of maximum strategy is 57.

the solution for the maximax strategy for business Y is 57

for business X strategy

Maximum of X Rows is 57, 34, 47, 35  

maximum of maximum strategy is 57.

the solution for the maximax strategy for business X is 57

b) Maximin

for business Y strategy

maximum of Y column is 47, 57, 32, 37

minimum of maximum strategy is 32.

the solution for the maximax strategy for business Y is 32

for business X strategy

Maximum of X Rows is 57, 34, 47, 35  

minimum of maximum strategy is 35.

the solution for the maximax strategy for business X is 35

c) Minimax Regret

Regret = Best Payoff - Payoff Received

Best Payoff = 47, 57, 32, 37 in pay of table

	y1	y2	y3	y4
x1	25	57	21	26
x2	17	29	20	34
x3	47	31	32	37
x3	35	27	30	35
best pay off	47	57	32	37

Regret table = best pay off - payoff received

	y1	y2	y3	y4
x1	47- 25 = 22	57-57 = 0	32-21 = 11	37 - 26 = 11
x2	47-17 = 30	57- 29 = 28	32-20 = 12	37-34=3
x3	47-47 =0	57-31= 26	32-32=0	37-37=0
x3	47 - 35 = 12	57 - 27=30	32-30=2	37-35=2
best pay off	47	57	32	37

Regret table

	y1	y2	y3	y4	Maximum
x1	22	0	11	11	22
x2	30	28	12	3	30
x3	0	26	0	0	26
x3	12	30	2	2	30

Maximum of Regret Table = 22, 30, 26, 30

Minimum of a Maximum of Regret Table is = 22

the solution of Minimax is (X1, Y1) = 25 in Payoff table