1. Problem 13-14 (Algorithmic)The following profit payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature:State of NatureDecision Alternative S1 S2 S3d1 200 150 75d2 250 150 50The probabilities for the states of nature are P(s1) = 0.5, P(s2) = 0.3 and P(s3) = 0.2.a. What is the optimal decision strategy if perfect information was available? S1 : d2 S2 : d1 or d2 S3 : d1 b. c. What is the expected value for the decision strategy developed in part (a)? If required, round your answer to one decimal place. d. Using the expected value approach, what is the recommended decision without perfect information? d2 What is its expected value? If required, round your answer to one decimal place. e. What is the expected value of perfect information? If required, round your answer to one decimal place.
1. Problem 13-14 (Algorithmic)
The following profit payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature:
State of Nature
Decision Alternative S1 S2 S3
d1 200 150 75
d2 250 150 50
The probabilities for the states of nature are P(s1) = 0.5, P(s2) = 0.3 and P(s3) = 0.2.
a. What is the optimal decision strategy if perfect information was available?
S1 : d2
S2 : d1 or d2
S3 : d1
b.
c. What is the expected value for the decision strategy developed in part (a)? If required, round your answer to one decimal place.
d. Using the expected value approach, what is the recommended decision without perfect information?
d2
What is its expected value? If required, round your answer to one decimal place.
e. What is the expected value of perfect information? If required, round your answer to one decimal place.
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