For the following problem, calculate: EV(d1) EV(d2) Best EMV EVwPI
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
For the following problem, calculate:
- EV(d1)
- EV(d2)
- Best EMV
- EVwPI
- EVPI
- The value of probability of s1 (p) that is the cut off of changing the best decision. Draw a number line.
- The value for which the payoff of the strong demand (S) of the best decision must be greater than to keep the best decision the same.
- The value for which the payoff of the weak demand (W) of the best decision must be greater than to keep the best decision the same.
- Analyze the scenario and explain what the results mean. Respond to the suggested thought.
Round all probabilities to three decimal places and all EV to one decimal place.
d1= build small complex, d2 = build large complex s1 = strong demand, s2 = weak demand
- Scenario: We are unable to get a prediction of the demand, so we go with 50/50. Think about how close EV(d1) is to EV(d2) and how this influences the problem.
P(s1) = 0.5 p(s2) = 0.5
|
|
s1 |
s2 |
|
d1 |
5 |
– 1 |
|
d2 |
14 |
– 8 |
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