Bundle: Modern Business Statistics with Microsoft Office Excel, Loose-Leaf Version, 6th + MindTap Business Statistics, 2 terms (12 months) Printed Access Card
6th Edition
ISBN: 9781337589383
Author: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams, Jeffrey D. Camm, James J. Cochran
Publisher: Cengage Learning
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Question
Chapter 20.2, Problem 1E
a.
To determine
Construct a decision tree for the problem.
b.
To determine
Compute the optimal decision using the
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The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature:
State of Nature
Decision Alternative S1
S2 S3
di
250 100 100
d2
200 100 150
The probabilities for the states of nature are P(s1) = 0.45, P(s2) = 0.25, and P(53) = 0.3.
(a) What is the optimal decision strategy if perfect information were available?
S1 : - Select your answer - V
S2
Select your answer -
S3 : - Select your answer - V
(b) What is the expected value for the decision strategy developed in part (a)? If required, round your answer to one decimal place.
(c) Using the expected value approach, what is the recommended decision without perfect information?
- Select your answer - v
What is its expected value? If required, round your answer to one decimal place.
(d) What is the expected value of perfect information? If required, round your answer to one decimal place.
The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature.
A large decision tree has an outcome branch detailed (next page). If decisions D1, D2, and D3 are all options in a 1-year period, find the decision path that maximizes the outcome value. There are specific investments necessary for decision nodes D1, D2, and D3, as indicated on each branch.
Chapter 20 Solutions
Bundle: Modern Business Statistics with Microsoft Office Excel, Loose-Leaf Version, 6th + MindTap Business Statistics, 2 terms (12 months) Printed Access Card
Ch. 20.2 - Prob. 1ECh. 20.2 - Prob. 2ECh. 20.2 - 3. Hudson Corporation is considering three options...Ch. 20.2 - 4. Myrtle Air Express decided to offer direct...Ch. 20.2 - 5. The distance from Potsdam to larger markets and...Ch. 20.2 - 6. Seneca Hill Winery recently purchased land for...Ch. 20.2 - 7. The Lake Placid Town Council has decided to...Ch. 20.3 - Consider a variation of the PDC decision tree...Ch. 20.3 - 9. A real estate investor has the opportunity to...Ch. 20.3 - Dante Development Corporation is considering...
Ch. 20.3 - 11. Hale’s TV Productions is considering producing...Ch. 20.3 - 12. Martin’s Service Station is considering...Ch. 20.3 - 13. Lawson’s Department Store faces a buying...Ch. 20.4 - Prob. 14ECh. 20.4 - 15. In the following profit payoff table for a...Ch. 20.4 - 16. To save on expenses, Rona and Jerry agreed to...Ch. 20.4 - 17. The Gorman Manufacturing Company must decide...Ch. 20 - Prob. 18SECh. 20 - 19. Warren Lloyd is interested in leasing a new...Ch. 20 - Hemmingway, Inc., is considering a $50 million...Ch. 20 - 21. Embassy Publishing Company received a...Ch. 20 - Case Problem Lawsuit Defense Strategy
John...
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