By calculating the probability of typhoon attack that year, assuming pdf to actual precipitation as a Gaussian distribution, establishing a loss function to evaluate damages caused by typhoon, the authors introduced the reservoir release ration(ω) as the ratio of reservoir release to the volume of predicted precipitation, and used such term to derive the optimal release amount as Z* = ω*X according to the derived formulas of optimal release ratio.(Cheng, Hsu and Wei, 73) By applying the methodology into the study of Tahan River Reservoir System, authors proved such methodology is promising.
In the medical decision making area, Mazur discussed the visual benefits of a decision tree for making decisions between surgery and radiation therapy…show more content… He explains how Stygian Chemical Inc. make a major decision in the start of a business: stay small or go big. There are many factors that can determine that outcome of those two possibilities for the company's future, such as low demand/ high demand in early and outlasting years. There are also many preferences that you have to take into account as a decision maker coming from the stockholders. This management tool helps in real life situations when you have “choices, risks, objectives, monetary gains and information needs involved in an investment problem.”
From the model above, one can see the outcome from the two decisions (because there are two decision nodes) that can be made: Low and High Average Demand, Initially Low Demand, High Initial, Low Subsequent Demand. It is up now to the decision makers to decide how to weigh and favorite each node and choice with probabilities and values in order to find the best payoff and therefore best decision. Remember that the model with the complete information added to it will not just reveal an answer, just give the management an insight into where the money is best and the direction the certain company should take, give there own preferences. One chairman of a company that thinks their product will only be popular in the market for a short period of time will probably make a different decision for the future of his company rather than a chairman that thinks his product will