State 1 | State 2 | State 3 | State 4 | |||||
0.35 | 0.3 | 0.15 | 0.2 | EMV | Minimum | Maximum | ||
Decision 1 | 1200 | 1400 | 1100 | 1800 | 1365 | 1100 | 1800 | |
Decision 2 | 1100 | 1300 | 1600 | 1200 | 1255 | 1100 | 1600 | |
Decision 3 | 1200 | 1700 | 1200 | 1100 | 1330 | 1100 | 1700 | |
Decision 4 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |
EVPI | Decision | |||||||
column best | 1200 | 1700 | 1600 | 1800 | Minimax | 500 | ||
EMV | 1365 | |||||||
Maximin | 1100 | |||||||
Maximax | 1800 | |||||||
EV|PI | 1530 | |||||||
EVPI | 165 | |||||||
Regret | ||||||||
State 1 | State 2 | State 3 | State 4 | Expected | Maximum | |||
0.3 | 0.3 | 0.3 | 0.1 | |||||
Decision 1 | 0 | 300 | 500 | 0 | 165 | 500 | ||
Decision 2 | 100 | 400 | 0 | 600 | 275 | 600 | ||
Decision 3 | 0 | 0 | 400 | 700 | 200 | 700 | ||
Decision 4 | 1200 | 1700 | 1600 | 1800 | 1530 | 1800 |
Formulas
a)
pessimist
Maximin = 1100 {any one of Alternative 1,2 and 3}
b)
optimist
maximax
= 1800
alternative 1
d)
equally likely
State 1 | State 2 | State 3 | State 4 | |||
0.25 | 0.25 | 0.25 | 0.25 | EMV | ||
Decision 1 | 1200 | 1400 | 1100 | 1800 | 1375 | |
Decision 2 | 1100 | 1300 | 1600 | 1200 | 1300 | |
Decision 3 | 1200 | 1700 | 1200 | 1100 | 1300 | |
Decision 4 | 0 | 0 | 0 | 0 | 0 | |
1375 is maximum, hence alternative 1
e)
minimax = 500
Alternative 1
f)
max EMV = 1365
alternative 1
g)
EVPI = 165
. Verizon LTE 5:02 PM 94% Problem 1 The following is a payoff table giving profits...
3.2) The following payoff table provides profits based on various possible decision alternatives and various levels of demand. States of Nature Demand Alternatives Alternative 1 Alternative 2 Alternative 3 Low Medium High 75 90 50 120 90 70 140 90 120 The probability of a low demand is 0.4, while the probability of a medium demand is 0.4 and high demand is 0.2 (a) What decision would an optimist make? (b) What decision would a pessimist make? (c) What is...
The following is a payoff table giving profits for various situations. State 2 State 1 State 3 Probability 0.35 0.4 0.25 Alternative 1 52 42 75 Alternative 2 58 30 83 Alternative 3 23 55 82 Alternative 4 33 55 44 If a person were to use the expected monetary value criterion, what decision would be made? Alternative 1 Alternative 2 Alternative 3 Alternative 4
The following is a payoff table giving profits for various situations: Alternatives A B C Alternative 1 140 148 150 Alternative 2 221 123 125 Alternative 3 123 140 212 Question: What decision would a pessimist make?
Problem 13-01 (Algorithmic) 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 210 130 75 130 280 75 a. Choose the correct decision tree for this problem 210 210 di S1 S1 280 280 130 130 S2 130 130 d2 d2 75 75 di S3 75 (iv) 130 210 S2 210 di S1 130 75 S2 130 210 210 S1 di $1 130 75...
ABC Inc. must make a decision on its current capacity for next year. Estimated profits (in $000's) based on next year's demand are shown in the table below. Next Year's Demand Alternative Low Medium HighExpand $100 $200 $250Subcontract $50 $120 $125Do Nothing $40 $50 $ 55 a. Which alternative should be chosen based on the maximax criterion? b. Which alternative should be chosen based on the maximin...
The following payoff table provides profits based on various possible decision alternatives and various levels of demand with probabilities of different demands: States of Nature Demand Alternatives Low Medium High Alternative A 80 120 140 Alternative B 70 90 100 Alternative C 30 60 120 Probability 0.4 0.3 0.3 What will be the expected value of perfect information (EVPI) for this situation?
1. The following is a payoff table giving profits for various situations. Alternatives A B C Alternative 1 120 140 120 Alternative 2 200 100 50 Alternative 3 100 120 180 Do Nothing 0 0 0 A recent forecast showed a 40% likelihood of A, a 10% likelihood of B, and a 50% likelihood of C. The decision criterion that now should be used to solve this problems is known as a. Equal Likelihood b. Expected Opportunity Loss c. Maximax...
The following is an opportunity loss table. States of Nature Alternatives A B C Alternative 1 90 0 130 Alternative 2 140 70 180 Alternative 3 0 50 0 Do Nothing 200 150 250 What decision should be made based on the minimax regret criterion? A B C ALTERNATIV1 90 0 130 ALTERNATIV2 140 70 180 ALTERNATIV3 0 50 0 DO NOTHING 200 150 250
Mick Karra is the manager of MCZ Drilling Products, which produces a variety of specialty valves for oil field equipment. Recent activity in the oil fields has caused demand to increase drastically, and a decision has been made to open a new manufacturing facility. Three locations are being considered, and the size of the facility would not be the same in each location. Thus, overtime might be necessary at times. The following table gives the total monthly profit (in $1,000s)...
Select the answers for questions 1-11, from the following list and write it on the answer sheet; A) State of nature B) Decision C) Alternatives D) Decision table E) Maximin F) Equally likely G) Decision tree H) Node I) Risk J) Favorable market K) Expected monetary value (EMV) L) probability M) Expected value of perfect information (EVPI) N) Pruned O) Decision table P) Maximax 1) A(n) is an occurrence or situation over which the decision maker has little or no...