Lafarge is a French industrial company specializing in three major products: cement, construction aggregates, and concrete. Lafarge Zambia operates 2 integrated cement plants (situated in Ndola and Lusaka) with a total production capacity of 1.4 million tonnes per annum. Lafarge Zambia is considering to develop a new plant in the central province of Zambia. The following three options available. These are to open a small plant, a medium-sized plant, or no plant at all. The marketing department has advised that the market for a plant in central province can be good, average, or bad. The probabilities for these three possibilities are 0.2 for a good market, 0.5 for an average market, and 0.3 for a bad market. The net profit or loss figures for the medium-sized and small plant for the various market conditions are given in the following table. Building no plant at all yields no loss and gain.
| Alternative | Good market (k) | Average market (k) | Bad market (k) |
| Small plant | 1,350,000 | 450,000 | -720,000 |
| Medium-sized plant | 1,800,000 | 630,000 | -1,080,000 |
| No plant | 0 | 0 | 0 |
The above information has been given to you as management accountant of Lafarge.
Required
1 Which of the three options would you recommend and why?
2 Basing on the minimax regret criterion and the minimum Expected Opportunity loss criterion, which would you recommend?
