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(c) Using your profit table from (b) above discuss which type of van SH should buy taking
into consideration the possible risk attitudes of the managers.
I wanted to ask what’s the reason for not using MINIMAX technique here?How do we know expected value should be discussed instead?
Also there’s another part of this question . Note: The original question, as written by the examiner, also had the following requirement
for six marks:
Describe THREE methods other than those mentioned in (a) above, which businesses can
use to analyse and assess the risk that exists in its decision-making.
Part (d) (i.e. the additional requirement) was poorly done by many. Those that had revised
the area of risk in decision making did well and scored good marks. Many clearly did not have
the knowledge required. **Minimax regret was not a valid answer despite what about 50% of
candidates thought. ** Sensitivity, simulation and market research comments all scored good
why wasn’t it a valid answer?
You could have mentioned minimax regret and got credit for it. However the examiners answer just mentions the methods that were mentioned in part (a).
In part (d) the wording of the question is poor (and the examiner has changed since this question was asked). Minimax regret (and the other methods in part (a)) do not measure or assess the risk involved. (However it is a pretty minor point given the number of marks involved 🙂 )