Question

Even though independent gasoline stations have been having a difficult time, Susan Solomon has been thinking about starting her own independent gasoline station. Susan’s problem is to decide how large her station should be. The annual returns will depend on both the size of her station and a number of marketing factors related to the oil industry and demand for gasoline. After a careful analysis, Susan developed the following table:

Answer 1

The maximax decision for Susan would be to have a very large gasoline station.

What is a Maximax decision?

This is the decision that provides a person with the maximum possible profits or advantages.

What is the Maximax decision in this case?

In this case, the maximax decision is a very large gasoline station because the possible profits add up to $325,000 ($25,000 + $300,000) and the possible losses are $100,000. This implies with this type of gasoline station Susan could maximize her profits even though there is a risk.

Note: This question is incomplete; here is the missing section:

• What is the Maximax decision?

Learn more about decisions in: brainly.com/question/7383200