Exhibit 14.8
The following questions use the information below.
A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.
-The decision rule which determines the maximum payoff for each alternative and then selects the alternative associated with the largest payoff is the
A) maximax decision rule.
B) maximin decision rule.
C) minimax regret decision rule.
D) minimin decision rule.

Question

Exhibit 14.8
The following questions use the information below.
A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.  
-The decision rule which determines the maximum payoff for each alternative and then selects the alternative associated with the largest payoff is the
A) maximax decision rule. 
B) maximin decision rule. 
C) minimax regret decision rule. 
D) minimin decision rule.

Quizplus · Accepted Answer

The maximax decision rule determines the maximum payoff for each alternative and selects the alternative with the largest payoff. Since the company is looking for the best insurance policy, it makes sense to choose the policy that provides the most coverage with the easiest billing process and that is also priced reasonably, making the maximax decision rule the most appropriate choice.

Exhibit 14.8 The Following Questions Use the Information Below