OPERATIONS AND SUPPLY CHAIN MANAGEMENT
9th Edition
ISBN: 9781119448037
Author: Russell
Publisher: WILEY
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Chapter 1.S, Problem 13P
Summary Introduction
To draw: The expected value of each decision and the expected value of perfect information.
Introduction: Decision analysis can be interpreted as the most common technique to make a decision in the situation when there is uncertainty. It uses quantitative measures to analyze the decision that is also used in operation of the firms.
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Students have asked these similar questions
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?
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.
Which investment should Warren make under each of the following criteria? a. Maximax criterion.
b. Maximin criterion.
c. Maximum likelihood criterion.
d. Bayes’ decision rule.
e. The investor decides that Bayes’ decision rule is his most reliable decision criterion. He
believes that 0.1 is just about right as the prior probability of an improving economy, but is quite uncertain about how to split the remaining probabilities between a stable economy and a worsening economy. Therefore, he now wishes to do some sort of sensitivity analysis with respect to these latter two prior probabilities. If he still wants to choose the alternative from
the Bayes’ decision rule (part d):
e1. How much would be the maximum amount of the prior probability of a stable economy? e2. How much would be the minimum amount of the prior probability of a worsening economy?
Chapter 1 Solutions
OPERATIONS AND SUPPLY CHAIN MANAGEMENT
Ch. 1.S - Prob. 1PCh. 1.S - Prob. 2PCh. 1.S - Prob. 3PCh. 1.S - Prob. 4PCh. 1.S - Prob. 5PCh. 1.S - In Problem S1-5 assume that Nicole, with the help...Ch. 1.S - Prob. 7PCh. 1.S - Prob. 8PCh. 1.S - Telecomp, a computer manufacturer with a global...Ch. 1.S - Prob. 10P
Ch. 1.S - Prob. 11PCh. 1.S - Prob. 12PCh. 1.S - Prob. 13PCh. 1.S - Prob. 14PCh. 1.S - Prob. 15PCh. 1.S - Prob. 16PCh. 1.S - Prob. 17PCh. 1.S - Prob. 18PCh. 1.S - In Problem S1-18, assume the Weight Club is able...Ch. 1.S - Prob. 20PCh. 1.S - Prob. 21PCh. 1.S - Prob. 22PCh. 1.S - Prob. 23PCh. 1.S - Prob. 24PCh. 1.S - Prob. 25PCh. 1.S - Prob. 26PCh. 1.S - Prob. 27PCh. 1.S - Prob. 28PCh. 1.S - Prob. 29PCh. 1.S - Prob. 30PCh. 1.S - Prob. 31PCh. 1.S - Prob. 33PCh. 1.S - Prob. 34PCh. 1.S - Alex Mason has a wide-curving, uphill driveway...Ch. 1.S - Prob. 36PCh. 1.S - Prob. 39PCh. 1.S - Prob. 40PCh. 1.S - State University has three healthcare plans for...Ch. 1.S - The Orchard Wine Company purchases grapes from one...Ch. 1.S - Prob. 43PCh. 1.S - Prob. 1.1CPCh. 1.S - Prob. 2.1CPCh. 1.S - Evaluating Projects at Nexcom Systems Nexcom...Ch. 1 - Feeding America Each year, the Feeding America...Ch. 1 - Feeding America Each year, the Feeding America...Ch. 1 - Feeding America Each year, the Feeding America...Ch. 1 - Feeding America Each year, the Feeding America...Ch. 1 - Prob. 1QCh. 1 - What constitutes operations at (a) a bank, (b) a...Ch. 1 - Prob. 3QCh. 1 - Prob. 4QCh. 1 - Prob. 5QCh. 1 - Prob. 17QCh. 1 - What is the difference between an order winner and...Ch. 1 - Prob. 21QCh. 1 - Prob. 22QCh. 1 - Prob. 23QCh. 1 - Prob. 24QCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Omar Industries maintains production facilities in...Ch. 1 - Rushing yardage for three Heisman Trophy...Ch. 1 - Carpet City recorded the following data on carpet...Ch. 1 - Prob. 9PCh. 1 - Prob. 10PCh. 1 - Prob. 11PCh. 1 - Prob. 12PCh. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Prob. 15PCh. 1 - Prob. 1.1CPCh. 1 - Prob. 1.2CPCh. 1 - Prob. 1.3CPCh. 1 - Prob. 1.4CPCh. 1 - Prob. 1.5CPCh. 1 - Prob. 2.1CPCh. 1 - Prob. 2.2CP
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