A decision maker has prepared the following payoff table. States of Nature Alternative High 75 Low Buy -10 Rent 70 30 Lease 50 35 Using the Maximin criterion, what is the best decision and the expected payoff? Best decision Payoff
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- DAAPS A decision maker has prepared the following payoff table. 1 States of Nature Alternative High Low Buy 80 10 Rent 60 45 Lease 50 40 Using the Maximin criterion, what is the best decision and the expected payoff? Best decision PayoffExhibit 20-2Below is a payoff table involving three states of nature and two decision alternatives. Decision States of Nature Alternative s1 s2 s3 A 80 45 –20 B 40 50 15 P(s1) = .1, P(s2) = .6, and P(s3) = .3.Refer to Exhibit 20-2. The expected value of the best alternative equals _____. a. 12 b. 38.5 c. 29 d. 105I want to answer to solve ㅠㅠㅠㅠ. Q1. A builder has located a piece of property that she would like to but and eventually build on. The land is currently zoned for four homes per acre, but she is planning to request new zoning. What she builds depends on approval of zoning requests and your analysis of this problem to advise her. With her input and your help, the decision process has been reduced to the following costs, alternatives, and probabilities Cost of land $2 MillionProbability of rezoning .6If the land is rezoned, there will be additional costs for new roads, lighting, and so on of $1 million. If the land is rezoned, the contractor must decide whether to build a shopping center or 1,500 apartments that the tentative plan shows would be possible. If she builds a shopping center, there is a 70% chance that she can sell the shopping center to a large department store chin for $4 million over her construction cost, which excludes the land; and there is a 30% chance that she can…
- c. From the following decision tree, develop a payoff table and calculate: * Maximax, Minimax regret, Maximin, and EMV. ORs. 50,000 Good conditions (0.60) Poor conditions (0.40) -O Rs. 30,000 Apartment Building Good conditions (0.60) O Rs. 100,000 Office building Poor conditions (0.40) Purchase ORs -40,000 Warchouse Good conditions (0.60) Rs.30, 000 Poor conditions (0.40) O Rs. 10,000The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent on the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): State of Nature Low Demand Medium Demand High Demand Decision Alternative s 1 s 2 s 3 Manufacture, d 1 -20 40 100 Purchase, d 2 10 45 70 The state-of-nature probabilities are P(s1) = 0.25, P(s2) = 0.25, and P(s3) = 0.50 (a) Use a decision tree to recommend a decision. (b) Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand. Enter your answer in thousands dollars. For example, an answer of $200 thousands should be entered as 200,000. Gorman attempt to obtain a better estimate of demand, as the additional information could be worth up to $ for Gorman. (c) A test market study of the potential…What information does a decision maker need in order to perform an expected-value analysis ofa problem? What options are available to the decision maker if the probabilities of the states ofnature are unknown? Can you think of a way you might use sensitivity analysis in such a case?
- A. A company wants to produce a souvenir with a marketing life of six months. Uncertainty surrounds the likely sales volume as well as the fixed costs of the venture as shown below: Sales units Probability Contrn. /unit Probability Fixed cost K7 K5 100 000 0.3 80 000 0.6 60 000 0.1 1.0 0.5 0.5 1.0 Determine the expected value of the contribution K400 000 K450 000 K500 000 Probability 0.2 0.5 0.3 1.0A payoff table is given as: S1 S2 S3 D1 250 750 500 D2 300 -250 1200 D3 500 500 600 (a) What choice should be made by the optimistic decision maker? (b) What choice should be made by the conservative decision maker? (c) What decision should be made under minimal regret? (d) If the probabilities of d1, d2, and d3 are .2, .5, and .3, respectively, then what choice should be made under expected value?A company wants to produce a souvenir with a marketing life of sixmonths. Uncertainty surrounds the likely sales volume as well as thefixed costs of the venture as shown below:Sales units Probability Contrn. /unit Probability Fixed cost Probability100 000 0.3 K 7 0.5 K400 000 0.2 Page 5 of 80 000 0.6 K 5 0.5 K450 000 0.560 000 0.1 K500 000 0.31.0 1.0 1.0 Determine the expected value of the contribution
- A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy 75 -10 Rent 70 30 Lease 50 35 Prior Probability 0.5 0.5 Using Baye's Decision Rule, what is the best decision and the expected payoff? (Round your answer to 1 decimal place.) Best decision РayofA decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy 90 10 Rent 60 35 Lease 50 40 Using the Maximax criterion, what is the best decision and the expected payoff? Best decision Payoff 3 of 5The following payoff table shows the profit for a decision problem with two states of nature and two decision alternatives. Decision Alternative State of Nature $1 d₁ d₂ (a) Suppose P(s₁) = 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 12 $₂ 6 3 5 (b) Perform sensitivity analysis on the payoffs for decision alternative d₂. Assume the probabilities are as given in part (a), and find the range of payoffs under states of natures, and so that will keep the solution found in part (a) optimal. As long as the payoff for s₁ under d₁ is --?-- , then the solution found in part (a) will be optimal. then the solution found in part (a) will be optimal. As long as the payoff for s₂ under d₁ is --?-- Is the solution more sensitive to the payoff under state of nature s₁ or 5₂? O $₁ 0 5₂