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
Q: A manager has to decide whether to prepare a bid or not. It costs P5,000 to prepare the bid. If the…
A: THE ANSWER IS AS BELOW:
Q: Happy Company is going to introduce one of the three new products (alternative) to the market: A, B…
A: The given data is
Q: Discuss how scenario plannin conditions of uncertainty and ca
A: Scenario planning is making presumptions on the thing what's in store will be and how your business…
Q: Case 1: Joint Probabilities Mr. X is planning to open a new salon. Annual revenue will depend on how…
A: Here, the cost is in proportion to the revenue, and the revenue is given as per the market campaign…
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A: Below is the solution:-
Q: Bakery Products is considering the introduction of a new line of products. In order to produce the…
A: Given data: Decision alternatives States of nature with profits survey results Conditional…
Q: Decision Tree Analysis. You are considering the decision to purchase a machine for internal…
A: Given- Purchase cost= $35000 Reward for good market scenario = $80,000 Reward for poor market…
Q: Build-Rite Construction has received favorable publicity from guest appearances on a public TV home…
A: a. Maximin Demand for Home Improvements Minimum Values Maximin Criteria(Maximum of these…
Q: 1. Mutual funds for ABC Company have Php500,000 available for one of the three investment…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: Price Estimation of various option showed in the table below Bid Price Option High Normal Low a1…
A: Decision making under uncertainty occurs where the information is not available to the decision…
Q: eferring to the pay-off table, determine which alternative would be chosen under each of these…
A: Find the given details below: Given Details Possible future demand in OMR Alternatives Low…
Q: Problem 3: A group of doctors is considering the construction of a private clinic. IF the medical…
A: Introduction: The term Business refers to an exchange of goods and services between the buyer and…
Q: Using the Maximax criterion, what is the best decision and the expected payoff? Best decision Payoff
A: Below is the solution:-
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A: Decision Table Alternatives High Low Buy 85 5 Rent 70 50 Lease 45 55…
Q: Bakery Products is considering the introduction of a new line of products. In order to produce the…
A: In decision theory, the expected value of sample information is the expected expansion in utility…
Q: Ms. Rabiya Mateo and Ms. Sandra Lemonon, two real-estate investment partners, are assessing the…
A: The Tagiug City averse partner is more likely influenced by Risk Severity. Risk Severity refers to…
Q: 1. Your parents want to invest in the hospitality business . The profits your parents will get will…
A: Note: Since you have posted multiple parts in the same questions, we will be answering the first…
Q: Build-Rite Construction has received favorable publicity from guest appearances on a public TV home…
A: The method through which different choices are evaluated in a business is referred to as decision…
Q: up with a decision using each of fhe different ciferia under condifions of uncertainty using the…
A: Small Introduction about Losses A loss function is really basic at its core: It's a way of…
Q: Adam has been offered to open up a Service station. However, the size of the establishment will be…
A: Since you have submitted multiple subparts as per guidelines we have answered the first three…
Q: The Irontown Independent School District wants to sell a parcel of unimproved land that it does not…
A: To prevail in the present economy, associations should gain by the abilities, information,…
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low…
A: Given Data: Decision-maker has 3 alternatives: 1. Buy 2. Rent 3. Lease And Has two outcomes, one…
Q: 1. Following is the payoff table for the Pittsburgh Development Corporation (PDC) Condominium…
A: given
Q: Consider the following payoff table for three product decisions (A, B, and C) and three future…
A: Given data is
Q: A landowner is considering a community development project. Even though he realizes that the current…
A: A maximax approach is a procedure in game hypothesis where a player, confronting vulnerability,…
Q: A company must decide now which of three products to make next year to plan and order proper…
A: (a) Minimum: This is defined as the decision-making strategy under uncertainty. It is termed as a…
Q: 1. The following solved problems refer to this payoff table: New No Bridge Built New Bridge 14…
A: The expected value approach considers the probability of each alternative and derives one value…
Q: Select the components or elements in the formulation of the following model.: Linear optimization…
A: The method used by the organization to optimizes the problem with the objective function and…
Q: A large apparel company wants to determine the profitability of one of its most popular products, a…
A: Estimated sales in region 1 Units Probability Expected value= units * probability…
Q: A firm must decide whether to construct a small, medium, or large stamping plant. A consultant's…
A: Given- Probability for low demand = 0.20 Probability for high demand= 0.80
Q: 2. Determine the course of action that has the highest expected payoff for the decision tree below!…
A: The calculation of the highest expected payoff requires multiplying each outcome by the estimate of…
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A: This question is related to the topic-decision making and this topic falls under the operations…
Q: A group of doctors is considering the construction of a private clinic. IF the medical demand is…
A: DECISION TREE: For favorable market - profit of P100,000. For unfavorable market - loss of…
Q: A decision maker has prepared the following payoff table. States of Nature Alternative Low High 80…
A: Decision Table Alternatives High Low Buy 80 -5 Rent 85 45 Lease 60 50
Q: A decision maker has prepared the following payoff table. States of Nature Alternative Buy High Low…
A: Decision Table Alternatives High Low Buy 85 -10 Rent 70 45 Lease 45 40
Q: Supposed that a decision-maker faced with four decision alternatives and four states of nature…
A: A scenario with a range of potential outcomes and a range of potential solutions can be represented…
Q: A decision maker has prepar States of Nature Alternative нigh Low 100 Buy Rent 80 45 Lease 50 40…
A: Small Introduction about the Maxi-Min Criterion The pessimistic (conservative) decision-making rule…
Q: Come up with a decision using each of the different criteria under conditions of uncertainty using…
A: Given-
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A: Decision Table Alternatives High Low Buy 80 10 Rent 60 45 Lease 50 40
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A: Decision Table Alternatives High Low Buy 100 0 Rent 60 35 Lease 60 45
Q: a. Draw the associated decision tree. b. Roll Back Tree: Should White Fish invest in an intensive…
A: As per Bartleby guidelines, we can only solve the first three subparts of one question at a…
Q: Dwayne Whitten, president of Whitten Industries, is considering whether to build a manufacturing…
A: A decision tree is a tool applied to make the decision based on the possible consequences. To make…
Q: Following is the payoff table for the Pittsburgh Development Corporation (PDC) Condominium Project.…
A: The expected value of decision 3 is
Q: What is the best of the worst decision alternative? DİHL Co. is a Danao-based logistics company…
A: Given data is
Q: A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy…
A: ANSWER : By using Baye's decision rule Buy alternative : 95*0.8+10*.02 = 76+2Expected Payoff = 78…
Q: A new minor league baseball team is coming to town and the owners have decided to build a new…
A: Expected value is a proportion of what you ought to hope to get per game over the long haul. The…
Q: ty 31 18 15 Medium Facility 20
A: The worst regrets of each alternative can be found be finding the regret table which can be arrived…
Q: McHardee Press publishes the Fast Food Menu Book and wishes to determine how many copies to print.…
A: m = 12,000. To find σ note that z = 2.31 corresponds to a 7% tail probability. Therefore, (20,000…
Decision Analysis
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield from a batch is unknown but the best case is 90% yield (that is, 900 pounds of good drug will be produced), the most likely case is 85% yield, and the worst case is 70% yield. The annual demand for the drug is unknown, with the best case being 20,000 pounds, the most likely case 17,500 pounds, and the worst case 10,000 pounds. The drug sells for 125 per pound and leftover amounts of the drug can be sold for 30 per pound. To maximize annual expected profit, how many batches of the drug should the company produce? You can assume that it will produce the batches only once, before demand for the drug is known.The Tinkan Company produces one-pound cans for the Canadian salmon industry. Each year the salmon spawn during a 24-hour period and must be canned immediately. Tinkan has the following agreement with the salmon industry. The company can deliver as many cans as it chooses. Then the salmon are caught. For each can by which Tinkan falls short of the salmon industrys needs, the company pays the industry a 2 penalty. Cans cost Tinkan 1 to produce and are sold by Tinkan for 2 per can. If any cans are left over, they are returned to Tinkan and the company reimburses the industry 2 for each extra can. These extra cans are put in storage for next year. Each year a can is held in storage, a carrying cost equal to 20% of the cans production cost is incurred. It is well known that the number of salmon harvested during a year is strongly related to the number of salmon harvested the previous year. In fact, using past data, Tinkan estimates that the harvest size in year t, Ht (measured in the number of cans required), is related to the harvest size in the previous year, Ht1, by the equation Ht = Ht1et where et is normally distributed with mean 1.02 and standard deviation 0.10. Tinkan plans to use the following production strategy. For some value of x, it produces enough cans at the beginning of year t to bring its inventory up to x+Ht, where Ht is the predicted harvest size in year t. Then it delivers these cans to the salmon industry. For example, if it uses x = 100,000, the predicted harvest size is 500,000 cans, and 80,000 cans are already in inventory, then Tinkan produces and delivers 520,000 cans. Given that the harvest size for the previous year was 550,000 cans, use simulation to help Tinkan develop a production strategy that maximizes its expected profit over the next 20 years. Assume that the company begins year 1 with an initial inventory of 300,000 cans.A 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 landlord can either lease for one or two years or sell offices outrightly for K100 million with payoffs as follows: Lease -100 50 150 Sell 100 100 100 The probability of rejecting is 30%, leasing for one year is 50% and for two years 20%. Required: What is the optimal decision strategy if perfect information were available? What is the expected value of perfect information? A decision maker is looking to minimising costs through three alternative decisions a1 , b2 and c3 under two states of nature/events S1 and S2 with S1 having a probability of 30% . For a1 payoffs for s1 K100 million and s2 K540 million For a2 payoff for s1 K150 million and s2 –K50 million For a3 payoff for s1 K350 million and s2 K320 million Required: Find EMV and recommend the course of action Find the…A television network earns an average of $1.6 million each season from a hit program and loses an averageof $400,000 each season on a program that turns out to be a flop, and of all programs picked up by thisnetwork in recent years, 25% turn out to be hits and 75% turn out to be flops. a) Construct a decision tree to help the television network identify the strategy that maximizes itsexpected profit in responding to a newly proposed television program. Make sure to label all decisionand chance nodes and include appropriate costs, payoffs and probabilities. b) What should the network do? What is their expected profit? c) The network can conduct market research to determine whether a program will be a hit or a flop. Ifthe market research report is perfectly reliable, what is the most the network should be willing to payfor it? Can you please include pictures of excel sheets. Having trouble determining what the excel sheet should look likeThe 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.
- If you want to invest in a project that cost $3.5 million. As we are unsure about the future demand, there is a 40% probability of high demand with a present value for the project $3 million. There is a 25% probability of moderate demand with a present value of $2.5 million. In addition, there is a 35% probability of low demand with a present value is $1.5 million. Draw a decision tree for this problem. What is the expected net present value of the business? Should you invest? Explain. Assume that you can expand the project by investing another $0.6 million after you learn the true future demand state. This would make the present value of the business $3.9 million in the high‐demand state, $3.5 million in the moderate demand state, and $1.80 million in the low demand state. Draw a decision tree to reflect the option to expand. Evaluate the alternatives. What is the net present value of the business if you consider the option to expand? How valuable is the option to expand?Carlisle Tire and Rubber, Inc., is considering expanding production to meet potential increases in the demand for one of its tire products. Carlisle’s alternatives are to construct a new plant, expand the existing plant, or do nothing in the short run. The market for this particular tire product may expand, remain stable, or contract. Carlisle’s marketing department estimates the probabilities of these market outcomes to be 0.25, 0.35, and 0.40, respectively. The file P06_31.xlsx (picture of given excel file is attached) contains Carlisle’s payoffs and costs for the various combinations of decisions and outcomes. Identify the strategy that maximizes this tire manufacturer’s expected profit. Perform a sensitivity analysis on the optimal decision, letting each of the monetary inputs vary one at a time plus or minus 10% from its base value, and summarize your findings. Which of the inputs appears to have the largest effect on the best solution?Dwayne Whitten, president of Whitten Industries, is considering whether to build a manufacturing plant in north Texas. His decision is summarized in the following table: Alternatives Favorable Market Unfavorable Market Build large plant $400,000 −$300,000 Build small plant $120,000 −$15,000 Don't Build $0 $0 Market Probability 0.40 0.60 a) The correct decision tree for Dwayne is shown in Figure ____ (all payoffs are in thousands). b) To maximize the return, Dwayne's decision should be to ______ . c) For Dwayne, the expected value of perfect information (EVPI) = $___________ (enter your answer as a whole num
- 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 Dry (D) Reasonably good(G) Bonanza(B) Drill $0 $85 $200 m Abandon $0 $0 $0 Probability 0.3 0.3 0.4 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. 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.…A small building contractor has recently experienced two successive years in which work opportunities exceeded the firm’s capacity. The contractor must now make a decision on capacity for next year. Estimated profits under each of the two possible states of nature are as shown in the tablebelow. Which alternative should be selected if the decision criterion is:a. Maximax?b. Maximin?c. Laplace?d. Minimax regret?NEXT YEAR’SDEMANDAlternative Low HighDo nothing $50* $60Expand 20 80Subcontract 40 70Consider the following payoff table for three product decisions (A, B, and C) and three future market conditions (payoffs = P millions) Assume that is now possible for the company to estimate a probability of 0.40 that market condition1 will exist, 0.40 for market condition 2 and a probability of 0.20 that market condition 3 will exist in the future. Determine the best decision using expected value. Determine the expected value of perfect information (EVPI)?Determine the best decision using expected opportunity loss.