The following payoff table shows a profit for a decision analysis problem with two decision alternatives and three states of nature. In order to get full credit, show your all work done step by step including cell calculations using excel functions.     State of Nature Decion Alternatives s1 s2 s3 d1 250 100 50 d2 100 75 100           a) Construct a decision tree for this problem. b) Suppose that the decision-maker obtains the probabilities P(s1)=0.65, P(s2)=0.15, and P(s3)=0.20. Use the expected value approach to determine the optimal decision.

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Decision Theory in Operations Management

Decision theory, also known as the theory of choice, is a branch of statistics that deals with making decisions based on the probability of the occurrence of an event. The chief purpose of decision theory is to identify the best course of action for the company with maximum payoffs.