Consider the following payoff table giving profits for various situations: States of Nature Alternatives A B...

Consider the following payoff table giving profits for various situations: States of Nature Alternatives A B C ALT 1 120 140 120 ALT 2 200 100 50 ALT 3 100 120 180 Do nothing 0 0 0 probability .3 .5. .2 Solve the following problems based on above payoff table 1. If a person were to use the expected monetary value criterion (EMV), what decision would be made? A) Alternative 1 B) Alternative 2 C) Alternative 3 D) Do Nothing 2. If a person selected Alternative 3, what would the expected profit be? A) 130 B) 120 C) 126 D) 0 3. What is the expected value of perfect information? A) 166 B) 36 C) 130 D) 120 4. What is the minimum expected opportunity loss (EOL)? A) 36 B) 46 C) 40 D) 166 5. A market research survey is available for $10,000. Using a decision tree analysis, it is found that the expected monetary value with no survey is $62,000. If the expected monetary value with the survey is $45,000, what is the expected value of sample information (EVSI)? A) $7,000 B) $62,000 C) -$7,000 D) $55,000 6. Draw a complete decision tree (show all the alternatives, state of nature, probabilities and pay off for each possible combination) and show the best alternative (what is your recommendation). 5 points

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orchestra answered 2 years ago

The following is a payoff table giving profits for various situations. States of Nature Alternatives A...

The following is a payoff table giving profits for various situations. States of Nature Alternatives A B C D Alternative 1 120 140 170 160 Alternative 2 210 130 140 120 Alternative 3 120 140 110 190 Do Nothing 0 0 0 0 a. What decision would a pessimist make? b. What decision would an optimist make? c. What decision would be made based on the realism criterion, where the coefficient of realism is 0.60? d. What decision would be...

1. the following is a payoff table giving profits for various situations. states of nature ......

1. the following is a payoff table giving profits for various situations. states of nature ... Question: 1. The following is a payoff table giving profits for various situations. &nb... 1. The following is a payoff table giving profits for various situations. States of Nature Alternatives A B C Alt-ve 1 100 120 180 Alt-ve 2 120 140 120 Alt-ve 3 200 100 50 Do Nothing 0 0 0 1. If a person were to use the expected monetary value...

You are given the following payoff table with profits (in $). Decision Alternative States of Nature...

You are given the following payoff table with profits (in $). Decision Alternative States of Nature s1 s2 d1 1000 3000 d2 4000 500 Assume the following probability information is given, where I1 and I2 are the outcomes of the sample information available: P(s1) = 0.45; P(I1 | s1) = 0.7; P(I2 | s1) = 0.3 P(s2) = 0.55; P(I1 | s2) = 0.6; P(I2 | s2) = 0.4 [2] Find the values of P(I1) and P(I2). [2] Determine the...

The following is a payoff table giving costs for various situations. What decision would an optimist...

The following is a payoff table giving costs for various situations. What decision would an optimist make? State 1 State 2 State 3 Alternative 1 45 37 83 Alternative 2 16 59 72 Alternative 3 23 65 91 Alternative 4 44 33 55

The following payoff table shows the profit for a decision problem with two states of nature...

The following payoff table shows the profit for a decision problem with two states of nature and two decision alternatives: State of Nature Decision Alternative s1 s2 d1 10 1 d2 7 3 (a) Suppose P(s1)=0.2 and P(s2)=0.8. What is the best decision using the expected value approach? Round your answer in one decimal place. The best decision is decision alternative (- Select your answer -d1 /d2) with an expected value of. (b) Perform sensitivity analysis on the payoffs for...

The payoff table below provides the profits (in thousands of dollars) for each of four alternatives...

The payoff table below provides the profits (in thousands of dollars) for each of four alternatives in each of three supplies. Supplies Alternative S1 S2 S3 A1 112 67 -26 A2 82 85 101 A3 85 72 80 A4 -50 90 110 Suppose that the probabilities for the supplies above are P(S1) = 0.6, P(S2) = 0.2, and P(S3) = 0.1. Which alternative should be selected under Bayes’ Rule? What is the expected value of perfect information for this decision?

Consider the following payoff table in which D1 through D3 represent decision alternatives, S1 through S4...

Consider the following payoff table in which D1 through D3 represent decision alternatives, S1 through S4 represent states of nature, and the values in the cells represent return on investments in millions. S1 S2 S3 S4 D1 30 20 -50 100 D2 60 150 40 -80 D3 40 10 80 80 What are the decision alternatives, and what are the chance events for this problem? Construct a decision tree What is the preferred alternative when the decision maker is...

The following payoff table shows profit for a decision analysis problem with two decision alternatives and...

The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Decision Alternative States of Nature s1 s2 s3 d1 240 90 15 d2 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 ? d₁ d₂

What is the expected value with perfect information of the following decision table? States of nature...

What is the expected value with perfect information of the following decision table? States of nature Alternative S1 S2 Probability 0.4 0.6 Option 1 10,000 30,000 Option 2 5,000 45,000 Option 3 -4,000 60,000 A) 5,000 B) 10,000 C) 40,000 D) 60,000 E) 70,000

payoff table ------------------------------------------- Demand Decision ---------------------------- Alternatives Low Medium High ------------------------------------------- Small, d1 400 400 400...

payoff table ------------------------------------------- Demand Decision ---------------------------- Alternatives Low Medium High ------------------------------------------- Small, d1 400 400 400 Medium, d2 100 600 600 Large, d3 -300 300 900 -------------------------------------------- a) If nothing is known about the demand probabilities, what are the recommended decision using the Maximax(optimistic), Maximin (pessi- mistic), and Minimax regret approaches? b) If P(low) = 0.20, P(medium) = 0.35, and P(high) = 0.45, What is the recommended decision using the expected value approach? c) What is the expected value of...

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