A decision maker has prepared the following payoff table.States of NatureAlternativeHighLow100BuyRent8045Lease5040Using the Maximin criterion, what is the best decision and the expected payoff?Best decisionPayoff

Small Introduction about the Maxi-Min Criterion The pessimistic (conservative) decision-making rule…

Answered: A decision maker has prepar States of…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Explain the DECISION TREES?
Very Favorable Average Market Unfavorable Alternatives Market Market Build new plant $250,000 $180.000 - S200,000 Subcontract $270.000 $185,000 - $220,000 Overtime S100.000 $50,000 - $12.000 Do Nothing SO SO $0 a) Using the decision making under uncertainty with the criterion of Maximax The appropriate decision will be The value of the return under this decision is $ b) Using the decision making under uncertainty with the criterion of Maximin The appropriate decision will be The value of the return under this decision is $ c) Using the decision making under uncertainty with the criterion of Equally Likely The appropriate decision will be The value of the return under this decision is $ (enter your answer as a whole number).
A manufacturing company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars). State of Nature Decision Low Alternative Demand $1 Medium Demand $2 High Demand 53 Manufacture, d -5 55 115 Purchase, d₂ 60 85 The state-of-nature probabilities are P(s₁) = 0.35, P(52) = 0.35, and P(53) = 0.30. (a) Use a decision tree to recommend a decision. The best decision is to purchase the component part. (b) Use EVPI to determine whether the company should attempt to obtain a better estimate of demand, assuming the estimate would come at no further cost. EVPI = 9 The EVPI suggests that the company should consider an attempt to obtain a better estimate of demand. (c) A test market study of the potential demand for the product is expected to report either a favorable (F) or…
In an analyzation of the auto industry in the US using Porter's Five Forces (including the level of competition within the industry) riding a bicycle, taking public transportation and walking are examples of items that appear in which ONE of the five forces? Select one: a. Threat of Substitutes b. Bargaining Power of the Buyer c. Bargaining Power of the Supplier d. Threat of New Entrants
9
State the differences between decision making under certainty, under risk, and under uncertainty.
A classical decision model describes decision making within a limited information and alternatives. True False
Come up with a decision using MINIMAX REGRET CRITERION under conditions of uncertainty using the table below. The payoff values are expressed as LOSSES.Which decision alternative has the minimum payoff value of the maximum regret? Choices: -> A,B,C-> C,D,E-> E,F,G-> B,F,G-> C,G,F
Decision theory under conditions of risk and uncertainty lends itself to severalmathematical techniques. Examine the difference maximin decision criterion and minimax regret decision criterion.
Refer to the payoff table below of profits in ($000). Which decision alternative results from using the Conservative (Pessimestic) Decision Rule? PAYOFF TABLE High Demand Small Medium Large 35 300 550 -10 Moderate Demand 35 150 75 -10 Low Demand Do Nothing O A. Large O B. Do nothing OC. Medium O D. Small O E. Cannot be determined since relative frequencies are missing. 35 50 -45 -10
What is the importance of Decision Quality?
Construct a decision tree and answer the following questions: What is the EMV of each decision alternative? Which action should be selected? What is the expected value with perfect information? What is the expected value of perfect information?

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A decision maker has prepar States of Nature Alternative нigh Low 100 Buy Rent 80 45 Lease 50 40 Using the Maximin criterion, what is the best decision and the expected payoff? Best decision Payoff