Patrick Bateman is considering four alternatives Friday night. The payoff for each opportunity will depend on economic and other conditions and are represented in the payoff table below. Poor Average Good Excellent Return videotapes 70 75 80 95 Dinner at Dorsia 95 40 200 220 Pick up friends in his limo 105 85 95 120 Design new business cards 65 105 120 125 Under which decision making and amount is the: A) optimistic B) pessimistic C) minimax D) Suppose that the likelihood for each of the scenarios is 0.5, 0.1, 0.35, and 0.05 What is the optimal decision under the expected value approach? E) Suppose that the likelihood for each of the scenarios is 0.5, 0.1, 0.35, and 0.05 What is the expected value of perfect information?

Patrick Bateman is considering four alternatives Friday night. The payoff for each opportunity will depend on economic and other conditions and are represented in the payoff table below. Poor Average Good Excellent Return videotapes 70 75 80 95 Dinner at Dorsia 95 40 200 220 Pick up friends in his limo 105 85 95 120 Design new business cards 65 105 120 125 Under which decision making and amount is the: A) optimistic B) pessimistic C) minimax D) Suppose that the likelihood for each of the scenarios is 0.5, 0.1, 0.35, and 0.05 What is the optimal decision under the expected value approach? E) Suppose that the likelihood for each of the scenarios is 0.5, 0.1, 0.35, and 0.05 What is the expected value of perfect information?

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

See similar textbooks

Similar questions

ysis ... Help Save & Exit Submit A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy 85 -5 Rent 75 40 Lease 45 45 Using the Maximin criterion, what is the best decision and the expected payoff? Best decision Payoff < Prev 5 of 5 Nexle
Help A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy 85 Rent 70 50 Lease 45 55 Prior Probability 0.7 0.3 Using Baye's Decision Rule, what is the best decision and the expected payoff? (Round your answer to 1 decimal place.) Best decision Payoff 4-
Given the following payoff table with the profits ($m), a firm might expect alternative investments (A, B, C) under different levels of interest rate. payoffs as profits states of nature 1(5%) decision 2(7%) 3(9%) alternatives A 14 22 6. B 19 18 11 12 17 15 (a) Which alternative should the firm choose under the maximax criterion? (b) Which option should the firm choose under the maximin criterion? (c) Which option should the firm choose under the LaPlace criterion? (d) Which option should the firm choose with the Hurwicz criterion with a = 0.2? (e) Using a minimax regret approach, what alternative should the firm choose? (f) Economists have assigned probabilities of 0.35, 0.3, and 0.35 to the possible interest levels 1, 2, and 3 respectively. Using expected monetary values, what option should be chosen and what is that optimal expected value? (g) What is the most that the firm should be willing to pay for additional information? Use Expected Regre (h) Use the alternative method to…
A decision maker has prepared the following payoff table. States of Nature Alternative High Low 90 15 Buy Rent 80 35 Lease 45 55 Using the Maximax criterion, what is the best decision and the expected payoff? Best decision Payoff
Calculate the payoffs of the following decision tree: Make movie Decision 3.62 Don't make movie Payoff 1= Payoff 2= Payoff 3= Payoff 4= TRUE -10 FALSE 0 High Revenue Chance 3.62 Medium Revenue Low Revenue 16% 23 15 19% 1 Payoff 1 Payoff 2 Payoff 3 Payoff 4
DAAPS A decision maker has prepared the following payoff table. 1 States of Nature Alternative High Low Buy 80 10 Rent 60 45 Lease 50 40 Using the Maximin criterion, what is the best decision and the expected payoff? Best decision Payoff
Maximax, Maximin, Minimax RegretLearning material: Watch this videoLab Scenario:Imagine a local entrepreneur is considering starting a business and has three options: open a coffeeshop, a bookshop, or a fusion coffee-bookshop. The entrepreneur is uncertain about the market'sreaction to these businesses. The possible market conditions are: favorable, neutral, and unfavorable.Data (Payoff Table in USD):Business Option Favorable Market Neutral Market Unfavorable MarketCoffee Shop 150,000 70,000 -30,000Bookshop 100,000 60,000 -20,000Fusion Shop 130,000 80,000 -10,000Positive values represent profits, and negative values represent losses.Assignment Steps:1. Maximax (Optimist's Criterion) Approach:For each business option, identify the maximum possible payoff.First Question What is the business option with the highest of these maximum payoffs? (5points)2. Maximin (Pessimist's Criterion) Approach:For each business option, identify the minimum possible payoff.Second Question What is the…
A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy 85 -10 Rent 70 45 Lease 45 40 Using the Maximin criterion, what is the best decision and the expected payoff? Best decision Payoff
- Please explain two characteristics of the maximum of minimum profits criterion (Maximin method)
A decision maker has prepared the following payoff table. States of Nature Alternative High Low Buy 95 10 Rent 65 35 Lease 45 50 Prior Probability 0.8 0.2 Using Baye's Decision Rule, what is the best decision and the expected payoff? (Round your answer to 1 decimal place.) Best decision Payoff Prev 1 of 5 Next >
Q5) what do you understand by rational decision making? How and what accepts will and should be used while reaching a decision? Part II) What is bounded reality decision? Why is bounded reality important and how can it be used to achieve a good result in achieving a rationally bounded reality? f7 num k 8 $ % & 3 4 5 6 7 8. 9. 4 R Y 2 3 + ||
Subject: Logistic Management Q#6) What is Porters Power Model explain with example? Q#7) What is risk management & mitigation explain with example?