Presented by: Amit Kanti Roy Sankalp Dubey

Car manufacturer, Hindustan Motor, in a competitive market, has a plant which can produce 5 car models. Companys profit depends upon car produced by competitor, Indian Motor Company, and are given in the following table.

HINDUSTAN MOTOR COS MODEL

K1 J1 J2 J3 J4 J5 3 5 2 6 2

K2 4 2 1 4 1

K3 2 7 4 2 9

K4 8 4 5 3 4

 The management of Hindustan Motor Co. knows the models India Motor Company can produce, it does not know what model(s) would actually be produced and sold by that company. If management of Hindustan Motor wants to maximize the profits, what should its strategy be?

K1
J1 J2 J3 J4 J5 3 5 2 6 6 2

K2
4 4

K3
2 2 7 4

K4
8 8 4 5 3 4

2 1 4 4

2
9 9

J1
J2

3
5

4
2

2
7

8
4

J3

Average of J1 and J2 dominates J3, So J3 is deleted

K1 J1 J2 J4 J5 3 5 6 2

K2 4 2 4 1

K3 2 7 2 9

K4 8 4 3 4

SJ=

J1 p1

J2 p2

J3 p3

J4 p4

J5 P5

P3=0, since Hindustan motors is not playing this strategy.

SK=

K1 q1

K2 q2

K3 q3

K4 q4

Where, p1+p2+p3+p4+p5=1 q1+q2+q3+q4=1

L.P.P. for Hindustan Motor:

Maximize V = Minimize (1/V) = Min {(p1/V) + (p2/V) + (p4/V) + (p5/V)} = Min (X1 + X2 + X3 + X4)

S.T.

3X1+5X2+6X3+2X4 4X1+2X2+4X3+X4 2X1+7X2+2X3+9X4 8X1+4X2+3X3+4X4

>= >= >= >=

1 1 1 1

Where X1, X2, X3, X4 =>0

L.P.P. for Indian Motor :

Minimize U = Maximize (1/U) = Max {(q1/U) + (q2/U) + (q3/U) + (q4/U)} = Max (Y1 + Y2 + Y3 + Y4)

S.T.

3Y1+4Y2+2Y3+8Y4 5Y1+2Y2+7Y3+4Y4 6Y1+4Y2+2Y3+3Y4 2Y1+1Y2+9Y3+4Y4

Where Y1, Y2, Y3, Y4 =>0

<= 1 <= 1 <= 1 <= 1

Y1=0 Y2=5/24

Y3=1/12
Y4=0

1/U=2/7 U*=7/2=V*

Using Duality We get X1*=5/24 X2*=1/12 X3*=0 X4*=0

Q1= Y1*U=0 Q2=Y2*U=(5/24)*(7/2)=35/48

Q3=Y3*U=(1/12)*(7/2)=7/24
Q4=Y4*U=0

P1=X1*V=(5/24)*(7/2)=35/48 P2=X2*V=(1/12)*(7/2)=7/24

P3=X4*V=0
P4=X5*V=0

SJ=

J1 35/48

J2 7/24

J3 0

J4 0

J5 0

P3=0, since Hindustan motors is not playing this strategy.

SK=

K1 0

K2 35/48

K3 7/24

K4 0

Value Of The Game=7/2

If It were Known that India Motor Co. would produce Model K4 only, what should Hindustan Motors decision be?

This Is now a case of pure strategy, where we know with certainty the strategy Of India Motor Co From the pay-off matrix, it can be seen that If Hindustan Motor Co. produces model J1,It will have maximum gain

Hindustan Motor Decision Should be to produce Model J1 only.