Create a sensitivity graph comparing the different alternatives as the probability of numbers of..

MedStar Health is expanding into Virginia. The firm must select one location where it can build a clinic to serve patients. The following table lists the expected profits for clinics in three locations and the expected probabilities of the two possible situations: high numbers of patients utilizing the clinic or low numbers of patients utilizing the clinic.

Location

High (0.75)

Low (0.25)

Alexandria

$1,500,000

$600,000

Woodbridge

$950,000

$900,000

Leesburg

$1,200,000

$200,000

Find the best decision using the following:

a. Develop a payoff table for this situation.

b. Find the following:

  1. Maximax
  2. Maximin
  3. Equal likelihood
  4. Minimax regret

c. Create a sensitivity graph comparing the different alternatives as the probability of numbers of patients changes.

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