1. modeling
T.Reema
T.Rawan

2. Payoff Table (decision table)
State of nature or Outcomes
Alternative
State of nature
Solid Growth (%)
Stagnation (%)
Inflation (%)
Bonds 12 6 3
Stocks 15 -2
CDs
6.5
Decision Alternative
payoffs

3. MaxiMin MaxiMin the minimum payoff (best of worst ) min 3 -2 6.5
Alternative
State of nature
Solid Growth (%)
Stagnation (%)
Inflation (%)
Bonds 12 6 3
Stocks 15 -2
CDs
6.5
min 3 -2
6.5
The optimal solution is the max= 6.5

4. MiniMax Regret Minimizes the maximum Regret Alternative
State of nature
Solid Growth (%)
Stagnation (%)
Inflation (%)
Bonds 12 6 3
Stocks 15 -2
CDs
6.5
Maximum

5. MiniMax Regret Minimizes the maximum Regret
Alternative
State of nature
Solid Growth (%)
Stagnation (%)
Inflation (%)
Bonds 12 6 3
Stocks 15 -2
CDs
6.5
6.5 – 6 = 0.5
= 3
6.5 – 3 = 3.5
= 0
6.5 – 3 = 3.5
6.5 – (-2 )= 8.5
= 8.5
6.5 – 6.5 = 0
6.5 – 6.5 = 0
Regret = Best payoff – payoff Received

6. Regret table Max regret 3.5 8.5 8.5 The optimal solution is 3.5
Alternative
State of nature
Solid Growth (%)
Stagnation (%)
Inflation (%)
Bonds 3
0.5
3.5
Stocks
8.5
CDs
Max regret
3.5
8.5
8.5
The optimal solution is 3.5

7. How to create decision table and calculate MinMax and MaxMin by using Excel:

8. 1- First select the row to calculate Min:

9. 2- Then from Home press AutoSum then Select Min:

10. 3- Repeat the previous steps to complete the table :

11. 4- Select the Min values then choose Max:

12. 5- The final Solution for MaxMin:
The optimal solution is the max= 6.5

13. Repeat steps for MinMax good luck