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 d1 250 100 25 d2 100 100 75

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 d1 250 100 25 d2 100 100 75

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter13: Regression And Forecasting Models

Section13.4: Multiple Regression Models

Problem 12P

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The 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 upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): Decision State of Nature Alternative Low Demand (S1) Medium Demand (S2) High Demand )S3) Manufacture, d(1) -20 40 100 Purchase, d(2) 10 45 70 The state-of-nature probabilities are P s1= 0.35, P s2= 0.35, and P s3= 0.30 Use expected value to recommend a decision.
The 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 upon 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 s1 s2 s3 Manufacture, d1 -20 40 100 Purchase, d2 10 45 70 The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30. Use a decision tree to recommend a decision.Recommended decision: Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand. EVPI: $ fill in the blank 3 A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows: P(F | s1) = 0.10 P(U | s1) = 0.90 P(F | s2) = 0.40 P(U |…
The 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 upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): state of nature low demand medium demnad high demand Decision alternative s1 s2 s3 manufacture d1 -20 40 100 purchase d2 10 45 70 The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30. a. A test market study of the potential demand for the product is expected to report either a favourable (F) or unfavourable (U) condition. The relevant conditional probabilities are as follows: P(F|S1)=0.10 P (U|S1)=0.90 P(F|S2)=0.40 P (U|S2)=0.60 P(F|S3)=0.60 P (U|S3)=0.40 Decision tree leading to market study/ prediction of favorable…
The 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 upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): state of nature low demand medium demnad high demand Decision alternative s1 s2 s3 manufacture d1 -20 40 100 purchase d2 10 45 70 The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30. a. A test market study of the potential demand for the product is expected to report either a favourable (F) or unfavourable (U) condition. The relevant conditional probabilities are as follows: P(F|S1)=0.10 P (U|S1)=0.90 P(F|S2)=0.40 P (U|S2)=0.60 P(F|S3)=0.60 P (U|S3)=0.40 Compute the probabilities by completing the table Sate of…
The 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 upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): state of nature low demand medium demnad high demand Decision alternative s1 s2 s3 manufacture d1 -20 40 100 purchase d2 10 45 70 The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30. a. A test market study of the potential demand for the product is expected to report either a favourable (F) or unfavourable (U) condition. The relevant conditional probabilities are as follows: P(F|S1)=0.10 P (U|S1)=0.90 P(F|S2)=0.40 P (U|S2)=0.60 P(F|S3)=0.60 P (U|S3)=0.40 A.Compute the probabilities by completing the table Sate of…
The 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 upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars): state of nature low demand medium demnad high demand Decision alternative s1 s2 s3 manufacture d1 -20 40 100 purchase d2 10 45 70 The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30. a.Use expected value to recommend a decision. b.Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand.
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 150 100 25 d2 100 100 75 (a) Choose the correct decision tree for this problem. (i) (ii) S1 150 150 $2 2 100 di $3 100 25 83 d2 25 100 d2 $2 3 3 100 $3 S3 75 75 (iii) S1 (iv) 150 150 2 2 d2 100 100 100 100 S2 3 3 $2 100 100 d2 $3 di 25 25 $3 4 S3 75 75 |- Select your answer - v (b) If the decision maker knows nothing about the probabilities of the three states of nature, what is the recommended decision using the optimistic, conservative, and minimax regret approaches? Optimistic approach Select your answer - v Conservative approach Select your answer - V Minimax regret approach - Select your answer
The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. States of Nature Decision Alternative $1 52 53 d1 d2 240 90 15 90 90 65 Suppose that the decision maker obtained the probabilities P(s₁) = 0.65, P(s2) = 0.15, and P(S3) = 0.20. Use the expected value approach to determine the optimal decision. EV(d₁) EV(d2) = = The optimal decision is --?--✓
A decision tree is a graphic display of the decision process that indicates decision alternatives, states of nature and their respective probabilities, and payoffs for each combination of alternative and states of nature. O True O False * Previous Next ► MacBook Air 000 000 DD F7 セゴ F5 $ & レ 9 * 00
The following payoff table shows a profit for a decision analysis problem with two decision alternatives and three states of nature. In order to get full credit, show your all work done step by step including cell calculations using excel functions. State of Nature Decion Alternatives s1 s2 s3 d1 250 100 50 d2 100 75 100 a) Construct a decision tree for this problem. b) Suppose that the decision-maker obtains the probabilities P(s1)=0.65, P(s2)=0.15, and P(s3)=0.20. Use the expected value approach to determine the optimal decision.
9. A decision-maker has two alternative courses of action, A1 and A2. There are three possible states of nature, S1, S2, and S3. The table of conditional profits, as well as the probabilities for the states of nature, appear below. Based on this decision table, which decision alternative produces the higher EMV? States of Nature Alternatives S1 S2 S3 A1 10,000 20,000 6,000 A2 5,000 30,000 15,000 Probability 0.3 0.5 0.2 Part 2 The best decision is ▼ a. alternative Upper A 1alternative A1 b. alternative Upper A 2alternative A2 , with an EMV=$________(enter your response as a whole number).
7. Consider the following decision table, which Joe Blackburn has developed for Vanderbilt Enterprises: States of Nature Decision Alternatives Probability: 0.35 0.25 0.40 Low Medium High A $35 $80 $65 B $85 $50 $70 C $55 $70 $75 D $70 $85 $65 E $70 $75 $85 Part 2 The alternative that provides Blackburn the greatest expected monetary value (EMV LOADING... ) is ▼ D E A B C The EMV for this decision is $_______(enter your answer as a whole number).