Chapter 13 Decision Analysis Question 2 10 Points The Following Payoff Table Shows Profit For A Decision Analysis Pr 1 (39.2 KiB) Viewed 14 times
Chapter 13 Decision Analysis Question 2 10 Points The Following Payoff Table Shows Profit For A Decision Analysis Pr 2 (27.92 KiB) Viewed 14 times
Chapter 13: Decision Analysis Question 2 (10 points): The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature: a. b. C. Decision Alternative d. d₁ d₂ $1 150 200 State of Nature $2 180 Construct a decision tree for this problem. (1 point) If the decision maker knows nothing about the probabilities of the three states of nature what is the recommended decision using the optimistic approach? (2.5 points) If the decision maker knows nothing about the probabilities of the three states of nature what is the recommended decision using the conservative approach? (2.5 points) If the decision maker knows nothing about the probabilities of the three states of nature what is the recommended decision using the minimax regret approach? (4 points) 160 $3 130 110 Question 3 (10 points): The following profit payoff table was presented in Question 2. Suppose that the decision maker obtained the probability assessments P(s)) = 0.45, P(sz) = 0.25, and P(s)) = 0.30. Decision Alternative d₁ dz $1 150 200 State of Nature $2 180 160 $3 130 110 a. Use the expected value approach to determine the optimal decision. (3 points) b. What is the optimal decision strategy if perfect information were available? (2 points) c. What is the expected value for the decision strategy developed in part (b)? (3 points) What is the expected value of perfect information? (2 points) d.
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