The following payoff table shows the profit for a decision problem with two states of nature and two decision alternatives. Decision Alternative ď₂ d₂ State of Nature $₁ 12 6 $2 3 5 (a) Suppose P(s) = 0.2 and P(5₂) = 0.8. What is the best decision using the expected value approach? The best decision is --?-- with an expected value of (b) Perform sensitivity analysis on the payoffs for decision alternative d₁. Assume the probabilities are as given in part (a), and find the range of payoffs under states of nature s, and so that will keep the solution found in part (a) optimal. As long as the payoff for s₁ under d, is --?--♥ , then the solution found in part (a) will be optimal. As long as the payoff for S₂ under d₂ is --?--|| , then the solution found in part (a) will be optimal. Is the solution more sensitive to the payoff under state of nature s, or s₂? OS₂ O s
The following payoff table shows the profit for a decision problem with two states of nature and two decision alternatives. Decision Alternative ď₂ d₂ State of Nature $₁ 12 6 $2 3 5 (a) Suppose P(s) = 0.2 and P(5₂) = 0.8. What is the best decision using the expected value approach? The best decision is --?-- with an expected value of (b) Perform sensitivity analysis on the payoffs for decision alternative d₁. Assume the probabilities are as given in part (a), and find the range of payoffs under states of nature s, and so that will keep the solution found in part (a) optimal. As long as the payoff for s₁ under d, is --?--♥ , then the solution found in part (a) will be optimal. As long as the payoff for S₂ under d₂ is --?--|| , then the solution found in part (a) will be optimal. Is the solution more sensitive to the payoff under state of nature s, or s₂? OS₂ O s
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section9.2: Elements Of Decision Analysis
Problem 2P
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