The following payoff table shows the profit for a decision problem with two states of nature and three decision alternatives, Decision State of Nature Lternative s1 S2 D1 10 30 D2 -5 20 D3 60 -10 Identify the decision taken under the following approaches: (1) Pessimistic (2) Optimistic (3) Equal probability (4) Regret (5) Hurwicz criterion. Note : The decision maker's degree of optimism (a) being 0.6.
Q: business owner is planning to strategies his company's growth, he can either buy , rent, or lease a…
A: Given information- The probability of business doing good = 0.7 The probability of a slow business…
Q: What is the best decision alternative under Maximax criterion? (Provide complete decision table…
A: Given data:
Q: Consider the payoff matrix below with actions, states of nature, and prior probabilities. 0.20 0.30…
A: This question is related to the topic-decision making and this topic falls under the operations…
Q: Exhibit 15-2. You would like to invest in one of the three available investment plans: money market,…
A: The expected value of perfect information is the amount that one would be responsible to give in…
Q: The following payoff table provides profits based on various possible decision alternatives adn…
A:
Q: Determine the optimal action based on the maximax criterion ii. Determine the optimal action based…
A: The investor who has certain amount of money to be invested, has assigned probability based on his…
Q: Chemitronix Ltd. is a microchips manufacturing company. It was found that the business is at the…
A: Expected monetary value = Chance of gain* Monetary gain + Chance of loss*Monetary loss For…
Q: Carlisle Tire and Rubber, Inc., is considering expanding production to meet potential increases in…
A: Carlisle Tire and Rubber Inc. both are considering expansion of production in order to meet their…
Q: A business owner is planning to strategize his company's growth. He can either buy, rent, or lease a…
A: Here the option 2 is correct. Using the Laplace's method the company go for buy decision.
Q: A landlord can either lease for one or two years or sell offices outrightly for K100 million with…
A: Note: - Since the exact question that has to be answered is not specified, we will answer the first…
Q: Dwayne Whitten, president of Whitten Industries, is considering whether to build a manufacturing…
A: Part a & b
Q: Many decision problems have the following simplestructure. A decision maker has two possible…
A: Consider a generalized decision maker's problem. The decision-maker has to decide between decision 1…
Q: 1. The Yellow Cab Pizza wants to launch a new pizza variant next month. After deliberations with…
A: Given- Expected Value = Profit ×Probability pi.xi = pi× xi
Q: A company is facing three types of decisions for the purchasing of a seasonal product. The profit…
A: Hi, we are authorized to answer one question at a time. We’ll answer the first question since the…
Q: Kroft Food Products is attempting to decide whether it should introduce a new line of salad…
A: The tree is comprised of a progression of nodes and branches. At the primary hub on the left, the…
Q: Happy Company is going to introduce one of the three new products (alternative) to the market: A, B…
A: Given Information:
Q: A decision table describes results associated with which of the following A) Two decision…
A: Find the answers below: The Correct answer is A) Two decision Variables
Q: Consider the following payoff table for three product decisions (A, B, and C) and three future…
A: Given data is
Q: The probability of business doing good is 0.7 and the probability of slow business is 0.3. Using…
A: He can easily buy the factory as the probability is 0.7 of good. ANSWER is BUY.
Q: Suppose that a decision is faced with three decision alternatives and four states of nature. The…
A: Following is the computed table: Formulas used: Decision: A3 will be recommended.
Q: Compute the expected opportunity loss (EOL) for each investment v. Explain the meaning of the…
A: Expected Monitory value indicating a decision making tool where the future remains as uncertain.…
Q: Kroft Food Products is attempting to decide whether it should introduce a new line of salad…
A: Following is the decision tree based on the given information:
Q: Show Solution): ABC Construction Company is going to decide whether they are going to expand their…
A: As Given data: Pay off table Decision Alternative States…
Q: Please use the payoff table (without the given prior probabilities) to answer the following…
A: Given payoff table-
Q: The following payoff table shows a profit for a decision analysis problem with two decision…
A: Formula: Answer:
Q: The research department of Unilever Ltd has recommended to the marketing department to launch a…
A: The given data: Types of Shampoo Estimated levels of sales Estimated levels of sales Estimated…
Q: Decision matrix below consists of COSTS expected, determine which alternative is dominant using with…
A:
Q: Given the following payoff table with the profits ($m), a firm might expect alternative investments…
A: Since you have submitted a question with multiple subparts, we have answered the first three…
Q: At the beginning of each day, a patient in the hospital is classifed into one of the three…
A: Below is the solution:-
Q: A local real estate investor in Orlando is considering three alternative investments: a motel, a…
A: The maximax payoff criterion looks for the biggest possible reward for each action. The maximum…
Q: 1. Problem 13-14 (Algorithmic)The following profit payoff table shows profit for a decision analysis…
A: The profit payoff table shows profit for a decision.The best paying decision is taken under each…
Q: The fixed cost of $6 million in the Acme problem is evidently not large enough to make Acme abandon…
A: Here expected worth should be under 0 for Acme relinquish the item at the current time expected…
Q: (a) What choice should be made by the optimistic decision maker? (b) What choice should be made by…
A: As per Bartleby guidelines, we can only solve the first three subparts of one question at a…
Q: 1. Andre and Zac run a salad shop called "Healthy from A to Z". They need to make the salads a day…
A: 1). Andre and Zac run a salad shop called "Healthy from A to Z". They need to make the salads a day…
Q: Carlisle Tire and Rubber, Inc., is considering expanding production to meet potential increases in…
A: Predictable profit in situation decision is - Concept new plant=probability in situation market…
Q: An investor has a certain amount of money available to invest now. Three alternative investments are…
A: Decision analysis are often defined because the approach utilized in business operations to form the…
Q: The Gorman Manufacturing Company must decide whether to manufacture a component part at its plant or…
A: As there are two alternatives, two branch nodes are drawn. For each alternative, there are 3 states…
Q: 10. An investor must decide between two alternative investments-stocks and bonds. The return for…
A: A payoff table refers to a table that can be used to represent and analyze a scenario that has a…
Q: Determine the various criterion from which the final decision has to be made. If the farmer wishes…
A: Since you have asked multiple subparts, we will solve the first three parts for you. If you want any…
Q: Zaki has been thinking about starting his own petrol station. He’s problem is to decide how large…
A: The maximax criterion applies to selecting the option that maximizes the highest payoff available.…
Q: Your company must decide whether to introduce a new product. The sales of the product will be either…
A: There are two alternatives. 1. Introduce a new product 2. Do not introduce a new product…
Q: An investor has a certain amount of money available to invest now. Three alternative investments are…
A: Hello thank you for the question. As per guidelines, we would provide only first three sub-parts at…
Q: A business owner is planning to strategize his company's growth. He can either buy, rent, or lease a…
A: Given information- The probability of business doing good = 0.7 The probability of a slow business…
Q: The director of career advising at Grand Valley Commu-nity College wants to use decision analysis to…
A: Projected income is the income which is an estimate of the financial results which come from the…
Q: The decision matrix shown consists of cost elements. Determine the alternative to be chosen using…
A: The alternative based on the Laplace criterion is as follows: Thus, the alternative based on the…
Q: Please use the payoff table (without the given prior probabilities) to answer the following…
A: Note: - Since we can answer only up to three subparts we will answer the first three(a, b, and c)…
Q: Consider the decision tree involving COSTS below. 300 0.6 0.4 500 500 0.7 3 0.3 200 Which of the…
A: This question is related to the topic-decision making and this topic falls under the operations…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Solve the following problems using the Decision Analysis. Construct first the decision tree, and then use Bayes' Formula to determine the optimal decision. Decision Problems 1. The Quano Company is considering the purchase of mineral rights on a piece of property for P1 million. The price includes a seismic test whether the land is of type X or Y geological formation. The test cannot be done until after the purchase is made. According to reliable information 60% of the land is of type X formation and 40% of the area is of type Y. If the company decides to drill on the land, it will cost P2.5 million. It may hit oil, gas, or a dry well. Drilling experience indicates that the probability of hitting oil is 25% on X formation and 10% on Y formation. The probability of hitting gas is 30% on X formation and 45% on Y formation. The estimated return for an oil well is P5 million and from a gas well, P3 million. Should the company purchase mineral rights?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.Come up with a decision using MINIMAX REGRET CRITERION under conditions of uncertainty using the table below. The payoff values are expressed as LOSSES.Which decision alternative has the minimum payoff value of the maximum regret? Choices: -> A,B,C-> C,D,E-> E,F,G-> B,F,G-> C,G,F
- Your company must decide whether to introduce a new product. The sales of the product will be either at a high (success) or low (failure) level. The conditional value for this decision is as follows Decision High Low Introduce $4,000,000 -$2,000,000 Do Not Introduce 0 0 Probability 0.3 0.7 You have the option to conduct a market survey to sharpen you market demand estimate. The survey costs $200,000. The survey provides incomplete information about the sales, with three possible outcomes: (1) predicts high sales, (2) predicts low sales, or (3) inconclusive. Such surveys have in the past provided these results Result High Low Predicts High 0.4 0.1 Inconclusive 0.4 0.5 Predicts Low 0.2 0.4 c) Draw the complete decision tree, including the survey option. Explain where the values on the decision tree come fromSupposed that a decision-maker faced with four decision alternatives and four states of nature develops the following profit payoff table.1. If the decision-maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using the MAXIMAX criterion?2. What decision alternative will he choose if using the MAXIMIN criterion?3. What about MINIMAX REGRET CRITERION?4. What decision would he make if using the criterion of realism at alpha 0.6 is used?Choose the letter of the correct answer on each questions being asked for each case 1. If the decision maker knows nothing about the probabilities of the four states of nature, what is the recommended decision using MAXIMAX CRITERION? D1 D2 D3 D4 2. What decision alternative will he choose if using MAXIMIN CRITERION? D1 D2 D3 D4 3. What about MINIMAX REGRET CRITERION? D1 D2 D3 D4 4. What decision would he make if using criterion of realism at alpha 0.6 is used? D1 D2 D3 D4
- Come up with a decision using each of the different criteria under conditions of uncertainty using the table below. The payoff values are expressed as LOSSES and alpha = 0.5 *a.)Which realism approach decision alternative has the maximum payoff? b.)What is the best equally likely decision to take? pcik from the choices -A at 45.5 -C at 61 -E at 53 -F at -54The 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 --?--✓Question 2 An oil company must decide whether or not to drill an oil well in a particular area that they already own. The decision maker (DM) believes that the area could be dry, reasonably good or a bonanza. See data in the table which shows the gross revenues for the oil well that is found. Decision Drill $0 Abandon $0 Probability 0.3 Dry (D) Seismic Results No structure(N) Open(0) Closed (C) Reasonably good(G) $85 $0 0.3 Drilling costs 40M. The company can take a series of seismic soundings at a cost of 12M) to determine the underlying geological structure. The results will be either "no structure", "open structure or "closed structure". The reliability of the testing company is as follows that is, this reflects their historical performance. Bonanza(B) Note that if the test result is "no structure" the company can sell the land to a developer for 50 m. otherwise (for the other results) it can abandon the drilling idea at no benefit to itself. $200 m $0 0.4 Dry(d) 0.7 0.2 0.1…
- The 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 5₂The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Decision Alternative If S1 d₁ d₂ States of Nature then ? $1 240 90 90 15 The probabilities for the states of nature are P(S₁) = 0.65, P(s₂) = 0.15, and P(s3) = 0.20. (a) What is the optimal decision strategy if perfect information were available? ; If S₂ then ? 90 65 ; If S3 then ? (b) What is the expected value for the decision strategy developed in part (a)? î (c) Using the expected value approach, what is the recommended decision without perfect information? What is its expected value? The recommended decision without perfect information is ? EV = (d) What is the expected value of perfect information? EVPI = îThe following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Decision Alternative d₁ d₂ States of Nature 51 5₂ 53 260 110 35 110 110 85 The probabilities for the states of nature are P(S₁) = 0.65, P(S₂) = 0.15, and P(s) = 0.20. (a) What is the optimal decision strategy if perfect information were available? If s, then? ;If s₂ then 2 ✓; If s₂ then ? (b) What is the expected value for the decision strategy developed in part (a)? (c) Using the expected value approach, what is the recommended decision without perfect information? What is its expected value? The recommended decision without perfect information is ? EV = (d) What is the expected value of perfect information? EVPI =