Federated Electronics, Ltd., manufactures display screensand monitors for computers and televisions, which it sellsto companies around the world. It wants to construct a new warehouse and distribution center in Asia to serve emerg-ing markets there. It has identified potential sites in the port cities of Shanghai, Singapore, Pusan, Kaohsiung, and HongKong and has estimated the possible revenues for each(minus construction costs which are higher in some citieslike Hong Kong). At each site the projected revenues are primarily based on these factors, (1) the economic condi-tions at the port including the projected traffic, infrastruc-ture, labor rates and availability; and expansion and modernization; and (2) the future government situationwhich includes the political stability, fees, tariffs, duties,and trade regulations. Following is a payoff table thatshows the projected revenues (in $ billions) for six years given the four possible combinations for positive and nega-tive port and government conditions:Determine the port city Federated should select for its newdistribution center using the following decision criteria:a. Maximaxb. Maximinc. Equal likelihoodd. Hurwicz ( .55) Port Port Port PortNegative/ Negative/ Positive/ Positive/Government Government Government GovernmentPort Negative Positive Negative PositiveShanghai —$0.271 $0.437 $0.523 $1.08Singapore —0.164 0.329 0.441 0.873Pusan 0.119 0.526 0.337 0.732Kaoshiung —0.235 0.522 0.226 1.116Hong Kong —0.317 0.256 0.285 1.653
Federated Electronics, Ltd., manufactures display screens
and monitors for computers and televisions, which it sells
to companies around the world. It wants to construct a new
warehouse and distribution center in Asia to serve emerg-
ing markets there. It has identified potential sites in the port
cities of Shanghai, Singapore, Pusan, Kaohsiung, and Hong
Kong and has estimated the possible revenues for each
(minus construction costs which are higher in some cities
like Hong Kong). At each site the projected revenues are
primarily based on these factors, (1) the economic condi-
tions at the port including the projected traffic, infrastruc-
ture, labor rates and availability; and expansion and
modernization; and (2) the future government situation
which includes the political stability, fees, tariffs, duties,
and trade regulations. Following is a payoff table that
shows the projected revenues (in $ billions) for six years
given the four possible combinations for positive and nega-
tive port and government conditions:Determine the port city Federated should select for its new
distribution center using the following decision criteria:
a. Maximax
b. Maximin
c. Equal likelihood
d. Hurwicz ( .55)
Port Port Port Port
Negative/ Negative/ Positive/ Positive/
Government Government Government Government
Port Negative Positive Negative Positive
Shanghai —$0.271 $0.437 $0.523 $1.08
Singapore —0.164 0.329 0.441 0.873
Pusan 0.119 0.526 0.337 0.732
Kaoshiung —0.235 0.522 0.226 1.116
Hong Kong —0.317 0.256 0.285 1.653
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