Suppose we are interested in investing in one of three investment opportunities: d1, d2, or d3.The following profit payoff table shows the profits (in thousands of dollars) under each of the 3possible economic conditions: s1, s2, and s3.Determine the best decision based on the optimistic decision making approach.d2Od2 or d1O d2 or d3O did3Decisiond1d2d3State of Natures2281740s1-5193s350156

Optimistic decision making model is considering the highest payoff indicating decision making…

Answered: Determine the best decision based on…

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 two best decision alternatives by a pessimistic decision maker. Decision dl d2 d3 d4 d2 and d4 Od1 and d4 Od1 and d2 d3 and d4 States of Nature $1 320 280 d1 and d3 170 450 $2 425 -160 100 220 83 -150 160 325 -175
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Determine the best decision based on the optimistic decision making approach. Decision d1 d2 d3 State of Nature s2 28 17 40 $1 -5 19 3 s3 50 15 6