The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Decision States of Nature Alternative d₁ 230 80 5 d₂ 80 80 80 55 The probabilities for the states of nature are P(s) 0.65, P(s2) 0.15, and P(s) = 0.20. (a) What is the optimal decision strategy if perfect information were available? If s, then-Select-; If s, then -Select-; Ifs, then --Select- (b) What is the expected value for the decision strategy developed in part (a)? (c) Using the expected value approach, what is the recommended decision without perfect information? What is its expected value? The recommended decision without perfect information is --Select-- . EV= (d) What is the expected value of perfect information? EVPI -

I have two questions. 1) Will improving customer service result in higher stock prices for the companies providing the better service? "When a company's satisfaction score has improved over the prior year's results and is above the national average (75.6), studies show its shares have a good chance of outperforming the broad stock market in the long run." The following satisfaction scores of three companies for the 4th quarters of two previous years were obtained from an economic indicator. Assume that the scores are based on a poll of 50 customers from each company. Because the polling has been done for several years, the standard deviation can be assumed to equal 6 points in each case. Company Year 1 Year 2 Company A 73 76 Company B 75 77 Company C 77 78 (a) For Company A, is the increase in the satisfaction score from year 1 to year 2 statistically significant? Use  ? = 0.05.  (Let ?1 = the satisfaction score for year 2 and ?2 = the satisfaction score for year 1.)…

The owner of Catamount Ice Cream needs to decide which size shop to rent in a new strip mall. He estimates that monthly profits will vary with demand for ice cream as follows: High Demand Demand Low Size of Shop Large 1,000 1,300 900 1,400 Medium Small 800 1,500 He feels there is a 40% chance that demand will be low and a 60% chance that demand will be high. He'll use a decision tree to help him decide what to do. When he draws his decision tree, how many circles will there be?

Tolkien’s marketing manager has been asked to develop a new promotional strategy for the company, which has been facing stiff competition from some new transport companies. After much research she has narrowed down the choice to three strategies and has constructed the decision tree shown below – which includes the payoffs and probabilities she has managed to estimate – but it is incomplete. She has identified three alternative promotional strategies (and their upfront cost): customer referral programme (£35,000); causes and charity (£30,000); branded gifts(£50,000). The impact on turnover in each case depends on the ‘reach’ of the promotional campaigns which could be high, medium or low. The payoffs represent the increase in annual sales turnover in £000s over a one-year period (excluding up-front costs). Required: Complete the decision tree by providing the value of all missing elements (shown as A, B, C, D, all marked with a *). Use the decision tree to advise the marketing manager…