DAAPSA decision maker has prepared the following payoff table.1States of NatureAlternativeHighLowBuy8010Rent6045Lease5040Using the Maximin criterion, what is the best decision and the expected payoff?Best decisionPayoff

Decision Table Alternatives High Low Buy 80 10 Rent 60 45 Lease 50 40

Answered: A decision maker has prepared the…

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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Determine the best investment, using the following decision criteria: a) Maximin b) Equal Likelihood c) Minimax Regret d) Hurwicz )alpha = 0.40) e) Maximax f) What coefficient of pessimism should an investor so that he is indifferent on his decision to either invest in restaurant or theater?
20. The Video Game Supply Company (VGS) is deciding whether to set next year's production at 2000, 2500, or 3000 games. Demand could be low, medium, or high. Using historical data, VGS estimates the probabilities as: 0.4 for low demand, 0.3 for medium demand, and 0.3 for high demand. The following profit payoff table (in $100s) has been developed. Demand Production Target Low Medium High 2000 games 2500 games 3000 games 1000 1200 1400 800 1500 1300 600 1700 1400 (a) [1] What is the maximax decision alternative? (b) [1] What is the maximin decision alternative? (c) [2] Determine the expected value of each alternative and indicate what should be the production target for next year based on expected value. (d) [1] Determine the expected value with perfect information about the states of nature. (e) [1] Determine the expected value of perfect information.
Come up with a decision using each of the different criteria under conditions of uncertainty using the table below. The payoff values are expressed as LOSSES and alpha = 0.5 * (a) What is the best of the best payoff value? (b) Which decision alternative has the best of the worst payoff value? (c) Which decision alternative has the minimum payoff value of the maximum regret? (d) Which realism approach decision alternative has the maximum payoff?(e) What is the best equally likely decision to take?
Describe the grid technique. What is its purpose, and how does it lead to the making of a decision? What are its strengths and limitations?
A well-known plastic mould and die manufacturer in Toronto intends to expand internationally in anticipation of strong demand and expansion in the plastic die manufacturing sector. use the table beneath. Using the Maximax, Maximin, and equally likely conditions, assist the business in making the best option in an unclear situation. 0.5 for a highly favourable condition, 0.2 for an average demand, and 0.3 for an unfavourable state are the probabilities linked with the states of nature.a) Choose the course of action that will give Andrew the highest predicted monetary value (EMV).b) Determine the anticipated value of perfect information (EVPI).
An oil company must decide whether or not to drill an oil well in a particular area that they already own. The decision maker (DM) believes that the area could be dry, reasonably good or a bonanza. See data in the table which shows the gross revenues for the oil well that is found. Decision Drill $0 Abandon $0 Probability 0.3 Dry (D) Seismic Results No structure(N) Open(0) Closed (C) Drilling costs 40M. The company can take a series of seismic soundings (at a cost of 12M) to determine the underlying geological structure. The results will be either "no structure", "open structure or "closed structure". The reliability of the testing company is as follows that is, this reflects their historical performance. Reasonably good(G) $85 $0 0.3 Note that if the test result is "no structure" the company can sell the land to a developer for 50 m. otherwise (for the other results) it can abandon the drilling idea at no benefit to itself. Dry(d) 0.7 0.2 Bonanza(B) 0.1 $200 m SO 0.4 Conditional…
2 true or false If the decision doesn’t involve risk and uncertainty, utility is the numerical score to measure the attractiveness of a course of action.
Is price an important evaluative criterion? What decision rule is applied to the evaluative criteria used? Is price likely to serve as a surrogate indicator of quality?
Construct a decision tree and answer the following questions: What is the EMV of each decision alternative? Which action should be selected? What is the expected value with perfect information? What is the expected value of perfect information?
Discuss the basic premise of the rational (classical) model of decision making and how does it differ from the rationality model.
The medical team at Birzeit Hospital are not sure whether to buy the COVID-19 vaccine from supplier A, B, or C. The analysis of previous experience dealing with the three suppliers reveals the following vaccine quality: Percent of ineffective vaccines Probability for Supplier A Probability for Supplier B Probability for Supplier C 2 0.60 0.50 0.70 5 0.30 0.30 0.00 7 0.10 0.20 0.30 The hospital buys 25000 vaccines each year which means that the probability to get 2% ineffective vaccines is 0.60 from supplier A, 0.50 from supplier B, and 0.70 from supplier C. Develop a decision tree to show your recommended alternative (supplier).
Alternative Alternative 1 Alternative 2 Alternative 3 State of Nature Outcome 1 ($) 800 500 700 0.62 Probability according to the payoff table? OEMV (Alternative 1) = $900 EMV (Alternative 3) is the highest EMV EMV (Alternative 2) = EMV (Alternative 3) EMV (Alternative 1) is the highest EMV Outcome 2 ($) 1000 1200 900 0.38 Which of the following statements is correct

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A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy 80 10 Rent 60 45 Lease 50 40 Using the Maximin criterion, what is the best decision and the expected payoff? Best decision Payoff