Statistics for Business & Economics (with XLSTAT Education Edition Printed Access Card) (MindTap Course List)
13th Edition
ISBN: 9781305585317
Author: David R. Anderson, Dennis J. Sweeney, Thomas A. Williams, Jeffrey D. Camm, James J. Cochran
Publisher: Cengage Learning
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Chapter 21.2, 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 21 Solutions
Statistics for Business & Economics (with XLSTAT Education Edition Printed Access Card) (MindTap Course List)
Ch. 21.2 - Prob. 1ECh. 21.2 - A decision maker faced with four decision...Ch. 21.2 - Hudson Corporation is considering three options...Ch. 21.2 - Myrtle Air Express decided to offer direct service...Ch. 21.2 - The distance from Potsdam to larger markets and...Ch. 21.2 - Seneca Hill Winery recently purchased land for the...Ch. 21.2 - The Lake Placid Town Council has decided to build...Ch. 21.3 - Consider a variation of the PDC decision tree...Ch. 21.3 - A real estate investor has the opportunity to...Ch. 21.3 - Dante Development Corporation is considering...
Ch. 21.3 - Hales TV Productions is considering producing a...Ch. 21.3 - Martins Service Station is considering entering...Ch. 21.3 - Lawsons Department Store faces a buying decision...Ch. 21.4 - Suppose that you are given a decision situation...Ch. 21.4 - In the following profit payoff table for a...Ch. 21.4 - To save on expenses, Rona and Jerry agreed to form...Ch. 21.4 - The Gorman Manufacturing Company must decide...Ch. 21 - An investor wants to select one of seven mutual...Ch. 21 - Warren Lloyd is interested in leasing a new car...Ch. 21 - Hemmingway, Inc. is considering a 50 million...Ch. 21 - Embassy Publishing Company received a six-chapter...Ch. 21 - Lawsuit Defense Strategy John Campbell, an...
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