Exercise 1.

Laplace, Wald or pessimistic, optimistic, Hurwicz and Savage criteria

(Profit Matrix):

To develop the exercise 1 to 3, it is necessary to consult the following reference:

Sharma, J. (2016). Operations Research : Theory and Applications. (pp. 341-347), New
Delhi: Laxmi Publications Pvt Ltd, v. Sixth edition. Available in the knowledge
environment of the course.

In the company ABC several alternatives are presented to choose the best technology of
four possible, whose performance depends on the adaptation of the workers who will
manipulate the equipments that comprise it. The expected benefits of each alternative
and degree of adaptation of the workers are given in the table, in millions of pesos ($).
For Hurwicz please assume an alpha of 0,7.

LAPLACE

p(j) (1/5) (1/5) (1/5) (1/5) (1/5) VM

Alternative Does not fit Fits acceptably Fits successfully Fits well Fits very well

Technology 1 2118 2168 2213 2265 2330 2218.80

Technology 2 2109 2158 2245 2252 2328 2218.4

Technology 3 2145 2177 2232 2256 2303 2222.6

Technology 4 2130 2166 2206 2255 2322 2215.8

Technology 5 2128 2165 2213 2275 2335 2223.2

row 5 is implemented as it generates the greatest utility.

WALD OR PESSIMISTIC

Alternative Does not fit Fits acceptably Fits successfully Fits well Fits very well Results

Technology 1 2118 2168 2213 2265 2330 2118

Technology 2 2109 2158 2245 2252 2328 2109

Technology 3 2145 2177 2232 2256 2303 2145

Technology 4 2130 2166 2206 2255 2322 2130

Technology 5 2128 2165 2213 2275 2335 2128

I perform the analysis and take the highest value of that analysis that in our case would
be Technology 3.

OPTIMISTIC

Alternative Does not fit Fits acceptably Fits successfully Fits well Fits very well Results

Technology 1 2118 2168 2213 2265 2330 2330

Technology 2 2109 2158 2245 2252 2328 2328

Technology 3 2145 2177 2232 2256 2303 2303

Technology 4 2130 2166 2206 2255 2322 2322

Technology 5 2128 2165 2213 2275 2335 2335

I perform the analysis and take the highest value of that analysis that in our case would
be Technology 5.

HURWICZ

Alternative Does not fit Fits acceptably Fits successfully Fits well Fits very well Results
Technology 1 2118 2168 2213 2265 2330 2266.4
Technology 2 2109 2158 2245 2252 2328 2262.3
Technology 3 2145 2177 2232 2256 2303 2255.6
Technology 4 2130 2166 2206 2255 2322 2264.4
Technology 5 2128 2165 2213 2275 2335 2272.9
Technology 5 is taken.

SAVAGE

Does not
Alternative fit Fits acceptably Fits successfully Fits well Fits very well Results

Technology 1 27 9 32 10 5 32

Technology 2 36 19 0 23 7 36

Technology 3 0 0 13 19 32 32
Technology 4 15 11 39 20 13 39
17
Technology 5 12 32 0 0 32

Exercise 2. Criteria of Laplace, Wald or pessimistic, optimistic, Hurwicz and

Savage (Cost matrix):

A warehouse of finished products that leases its services to imports from the USA, must
plan its level of supply to satisfy the demand of its customers in the day of love and
friendship. The exact number of crates is not known, but is expected to fall into one of
five categories: 610, 630, 680, 715 and 730 crates. There are therefore four levels of
supply. The deviation from the number of hoppers is expected to result in additional
costs, either due to excessive supplies or because demand can not be met. The table
below shows the costs in hundreds of dollars (US $). For Hurwicz please assume an alpha
of 0,75.

According to Table 2 by applying the criteria of Laplace, Wald or pessimistic, optimistic

criteria, Hurwicz and Savage determine the optimal decision level according to the
benefit criteria.
LAPLACE

p(j) (1/5) (1/5) (1/5) (1/5) (1/5) VM

Alternative e1(610) e2(630) e3(680) e4(715) e5(730)
e1(610) 2109 2197 2236 2271 2332 2229
e2(630) 2112 2152 2228 2281 2315 2217.6
e3(680) 2137 2168 2240 2275 2317 2227.4
e4(715) 2110 2176 2238 2286 2331 2228.2
e5(730) 2136 2173 2243 2287 2329 2233.6

The best alternative would be 2 since it has greater utility

WALD OR PESSIMISTIC

Alternative e1(610) e2(630) e3(680) e4(715) e5(730) Results

e1(610) 2109 2197 2236 2271 2332 2332
e2(630) 2112 2152 2228 2281 2315 2315
e3(680) 2137 2168 2240 2275 2317 2317
e4(715) 2110 2176 2238 2286 2331 2331
e5(730) 2136 2173 2243 2287 2329 2329
row 2 is chosen because it has less utility

HURWICZ

Alternative e1(610) e2(630) e3(680) e4(715) e5(730) Results

e1(610) 2109 2197 2236 2271 2332 2164,75
e2(630) 2112 2152 2228 2281 2315 2162,75
e3(680) 2137 2168 2240 2275 2317 2182
e4(715) 2110 2176 2238 2286 2331 2165,25
e5(730) 2136 2173 2243 2287 2329 2184,25
Row 5 is taken because that is where there is more probability.

SAVAGE

Alternative e1(610) e2(630) e3(680) e4(715) e5(730) Results

e1(610)
0 45 8 0 17 45
e2(630) 3 0 0 10 0 10
e3(680) 28 16 12 4 2 28
e4(715) 1 24 10 15 16 24
e5(730) 27 26 15 16 14 27
The best state would be 2, which is the lowest expected cost

Exercise 3. Criteria of Laplace, Wald or pessimistic, optimistic, Hurwicz and

Savage (Cost matrix):

A warehouse of finished products that leases its services to imports from the USA, must
plan its level of supply to satisfy the demand of its customers in the day of love and
friendship. The exact number of crates is not known, but is expected to fall into one of
five categories: 580, 720, 750, 790 and 830 crates. There are therefore four levels of
supply. The deviation from the number of hoppers is expected to result in additional
costs, either due to excessive supplies or because demand can not be met. The table
below shows the costs in hundreds of dollars (US $). For Hurwicz please assume an alpha
of 0,55.

According to Table 3 by applying the criteria of Laplace, Wald or pessimistic, optimistic

criteria, Hurwicz and Savage determine the optimal decision level according to the
benefit criteria.
LAPLACE

p(j) (1/5) (1/5) (1/5) (1/5) (1/5) VM

Alternative e1(610) e2(630) e3(680) e4(715) e5(730)
e1(610) 1147 1152 1238 1283 1311 1226.2
e2(630) 1109 1193 1222 1298 1314 1227.2
e3(680) 1106 1181 1245 1281 1346 1231.8
e4(715) 1134 1177 1249 1276 1349 1237
e5(730) 1149 1197 1248 1260 1328 1236.4

State 2 is chosen since the cost is low

WALD OR PESSIMISTIC

Alternative e1(610) e2(630) e3(680) e4(715) e5(730) Results

e1(610) 1147 1152 1238 1283 1311 1311
 e2(630) 1109 1193 1222 1298 1314 1314
e3(680) 1106 1181 1245 1281 1346 1346
e4(715) 1134 1177 1249 1276 1349 1349
e5(730) 1149 1197 1248 1260 1328 1328

The best state would be 1, since looking at the results is the most appropriate.

HURWICZ

Alternative e1(610) e2(630) e3(680) e4(715) e5(730) Results

e1(610) 1147 1152 1238 1283 1311 1220.8

e2(630) 1109 1193 1222 1298 1314 1201.25
e3(680) 1106 1181 1245 1281 1346 1214
e4(715) 1134 1177 1249 1276 1349 1230.75
e5(730) 1149 1197 1248 1260 1328 1229.55

The best state would be 2, which is the lowest expected cost.

SAVAGE

Alternative e1(610) e2(630) e3(680) e4(715) e5(730) Results

e1(610)
41 16 23
0 0 41
e2(630)
3 41 38 3
0 41
e3(680)
23 21 35
0 29 35
e4(715)
28 25 16 38
27 38
e5(730) 43 45 26 0 17 45

The option 3 with the lowest opportunity cost is chosen.

Exercise 4. Game Theory method:

To develop the exercise 4 to 5, it is necessary to consult the following reference:

Sharma, J. (2016). Operations Research : Theory and Applications. (pp. 383-391), New
Delhi: Laxmi Publications Pvt Ltd, v. Sixth edition. Available in the knowledge
environment of the course.

Graphical solutions are only applicable to games in which at least one of the players has
only two strategies. Consider the following 2 x n game:

Player 2
Strategy
A B C
I 27 33 38
Player 1
II 19 25 31

According to Table 4 find the value of the game by means of the graphical method
applied to matrices 2 x n or m x 2.

player 2
A B C min
I 27 33 38 27
Player 1
II 19 25 31 19

max 27 33 38

The minimum and maximum given the same 27, we deliver the game.

Exercise 5. Game Theory method:

Graphical solutions are only applicable to games in which at least one of the players has
only two strategies. Consider the following game m x 2:

Player 2
Strategy
A B
I 27 35
Player 1 II 31 35
II 33 37

According to Table 5, find the value of the game by means of the graphical method
applied to matrices 2 x n or m x 2.
 Player 2
Strategy
A B min
I 27 35 27
Player 1 II 31 35 31
II 33 37 33
max 33 37

As the minimum and maximum gave us 33 we give the game over.

Exercise 6. Optimum solution of two-person games (Theory of games, mixed

strategies):

To develop the exercise 6, it is necessary to consult the following reference:

Sharma, J. (2016). Operations Research : Theory and Applications. (pp. 383-391), New
Delhi: Laxmi Publications Pvt Ltd, v. Sixth edition. Available in the knowledge
environment of the course.

The games represent the latest case of lack of information where intelligent opponents
are working in a conflicting environment. The result is that a very conservative criterion
is generally proposed to solve sets of two people and sum zero, called minimax - maximin
criterion. To determine a fair game, the minimax = maximin, it is necessary to solve the
stable strategy through the Solver.

PLAYER B
81 83 81 80 91
PLAYER A

84 83 86 86 82
82 78 86 89 84
87 87 91 89 88
83 85 35 88 81

Solve the game of players A and B to determine the value of the game, using the
proposed Excel tool, according to the data in table 6.
 Q1 Q2 Q3 Q4 Q5 I MinZ=V
1 0 0 0 0 1 87

PLAYER B Min Max VE

P1 0 81 83 81 80 91 80 81
PLAYER A

P2 0 84 83 86 86 82 82 84
P3 0 82 78 86 89 84 78 87 82
P4 1 87 87 91 89 88 87 87
P5 0 83 85 35 88 81 35 83
I 1 Max 87 87 91 89 91
Min 87

VE 87 87 91 89 88

MaxZ=V 87