Minimin Criterion : It is totally opposite of maximax criterion. In this criterion thinking of decision maker is pessimistic. According to this criterion choose that course of action which minimizes the minimum possible pay – offs or profits. Thus locate minimum pay – off under every course of action and then select the act with minimum pay – off under every course of action and then select the act with pay – of. Since this decision rule locates the course of action which has minimum possible pay – off, it is also known as pessimistic decision criterion.
To illustrate above terminology consider following conditional pay – off matrix where A1, A2, A3, A4 are four courses of action and S1, S2, S3, S4 are four states of nature.
Pay off Table
|
States of Nature |
Courses of Action |
|||
|
A1 |
A2 |
A3 |
A4 |
|
|
S1 |
10 |
20 |
35 |
15 |
|
S2 |
18 |
24 |
30 |
12 |
|
S3 |
15 |
20 |
30 |
32 |
|
S4 |
18 |
24 |
30 |
18 |
Minimum Pay off under A1 : 10
Minimum Pay off under A2 : 20
Minimum Pay off under A3 : 30
Minimum Pay off under A4 : 12
Thus using this criterion best act is A1
What will be the result of the following pay off table with minimin criterion?
COST MATRIX
STATE OF THE WORLD
S1 S2 S3
A1 0 20 40
A2 80 0 80
A3 160 80 0