Western Plastic Surgery Associates is planning on opening a cosmetic plastic surgery center in either Honolulu, San Francisco, or Seattle. There is a 60 percent chance that the demand for plastic surgery in the United States will increase in the near future, a 25 percent chance that the number will remain the same, and a 15 percent chance that the number will decrease. The developer estimates that the following profits would result from each decision given each set of economic conditions.
Find the best decision using the following:
a. Develop a payoff table for this situation.
b. Find the following:
- Equal likelihood
- Minimax regret
c. Can you create a sensitivity graph comparing the different alternatives as the probabilities of increase, same, and decrease change? Why or why not?