(Show full process)
|
Alternatives |
|
MAXIMAX |
MAXIMIN |
LAPLACE |
||
|
Big (0.3) |
Average (0.5) |
Small (0.2) |
||||
|
Large Stock |
$22,000 |
$ 12,000 |
-$ 2,000 |
|||
|
Average Stock |
14,000 |
10,000 |
6,000 |
|||
|
Small Stock |
9,000 |
8,000 |
4,000 |
|||
|
Final Decision |
||||||
Q1. What’s your final decision under MAXIMAX, MAXIMIN,
LAPLACE?
(Show your final decision
with a full process in the worksheet)
Q2. Construct a regret table (opportunity loss
table) below and determine the best decision
using MINIMAX
decision criterion. Answer (Final decision):
|
Alternatives |
|
Highest Regrets |
||
|
Big (0.3) |
Average (0.5) |
Small (0.2) |
||
|
Large Stock |
||||
|
Average Stock |
||||
|
Small Stock |
||||
Q3. If the probabilities associated with the state of nature are
03 for a Big demand, 0.5 for an
Average demand, and 0.2 for a
Small demand, determines the best strategy using (1)
Expected monetary value (EMV) and
(2) Expected opportunity loss (EOL) decision criterion
EMV(Large)
=
EMV(Average) =
EMV(Small) =
Answer (Final decision):
EOL
(Large) =
EOL (Average) =
EOL
(Small) =
Answer (Final decision):
Q4. What’s the expected value with perfect information
(EVwPI)?
Q5. What’s the expected value of perfect information (EVPI)?
ScholarMatic: Explanation & Answer
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