of over 100. At the present time, Ken is forced to consider purchasing some more equipment for Brown Oil because of competition. His alternatives are shown in the following table: EQUIPMENT Sub 100 Oiler J Texan FAVORABLE UNFAVORABLE MARKET MARKET ($) ($) 300,000 -200,000 250,000 -100,000 75,000 -18,000 For example, if Ken purchases a Sub 100 and if there is a favorable market, he will realize a profit of $300,000. On the other hand, if the market is unfa- vorable, Ken will suffer a loss of $200,000. But Ken has always been a very optimistic decision maker. (a) What type of decision is Ken facing? (b) What decision criterion should he use? (c) What alternative is best? 31%
Fig: 1