1. The following solved problems refer to this payoff table: New Bridge Built No New Bridge 14 Alternative capacity A 1 for new store B 10 4 where A small, B = medium, and C large. Assume the payoffs represent profits. Determine the alternative that would be chosen under each of these decision criteria: a. Maximin. b. Маximax. c. Laplace. 2. Using the information in the payoff table, develop a table of regrets, and then a. Determine the alternative that would be chosen under minimax regret. b. Determine the expected value of perfect information using the regret table, assuming that the probability of a new bridge being built is .60. 3. Using the probabilities of .60 for a new bridge and 40 for no new bridge, a. Compute the expected value of each alternative in the payoff table, and identify the alternative that would be selected under the expected-value approach. b. Construct a decision tree for the problem showing expected values.
1. The following solved problems refer to this payoff table: New Bridge Built No New Bridge 14 Alternative capacity A 1 for new store B 10 4 where A small, B = medium, and C large. Assume the payoffs represent profits. Determine the alternative that would be chosen under each of these decision criteria: a. Maximin. b. Маximax. c. Laplace. 2. Using the information in the payoff table, develop a table of regrets, and then a. Determine the alternative that would be chosen under minimax regret. b. Determine the expected value of perfect information using the regret table, assuming that the probability of a new bridge being built is .60. 3. Using the probabilities of .60 for a new bridge and 40 for no new bridge, a. Compute the expected value of each alternative in the payoff table, and identify the alternative that would be selected under the expected-value approach. b. Construct a decision tree for the problem showing expected values.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 30P
Related questions
Question
100%
solve number 2
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
Recommended textbooks for you
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,