Decision Analysis

 Decision Evaluation Essay

Section 3 – Question 28

(a) Develop a decision stand for this decision?

Decision Alternatives| Market (‘000)

| Good| Fair| Poor

Small| 50| 20| –10

Medium| 80| 30| –20

Large| 100| 30| –40

Very Large| 300| 25| –160

(b) What is the maximax decision?

Decision Alternatives| Market (‘000)| Maximax decision shall be the ideal value of your row/decision alternatives| Maximax Decision Alternative| | Good| Fair| Poor| |

Small| 50| 20| –10| | 50

Medium| 80| 30| –20| | 80

Large| 100| 30| –40| | 100

Very Large| 300| 25| –160| | three hundred

If maximax decision will be chosen: The choice shall be to open VERY LARGE gas station.

(c) What is the maximin decision?

Decision Alternatives| Market (‘000)| Maximin decision shall be the most maximum value of a maximin decision alternatives| Maximin Decision Alternative| | Good| Fair| Poor| |

Small| 50| 20| –10| | –10

Medium| 80| 30| –20| | –20

Large| 100| 30| –40| | –40

Very Large| 300| 25| –160| | –160

If maximin decision shall be chosen: Your decision shall be to spread out SMALL gasoline station.

(d) What is the equally most likely decision?

Decision Alternatives| Industry (‘000)| Equally Likely (Row Average)| Equally Likely Decision Alternative| | Good| Fair| Poor| = (Max – Min)/2|

Small| 50| 20| –10| = [50 + (-10)] / 2| 20

Medium| 80| 30| –20| = [80 + (-20)] / 2| 31

Large| 100| 30| –40| = [100 + (-40)] / 2| 30

Incredibly Large| 300| 25| –160| = [300 + (-160)] / 2| 70| If perhaps equally most likely decision is to be chosen: Your decision shall be to open VERY LARGE gasoline station.

(e) Precisely what is the qualifying criterion of realism decision? Use an value of 0. eight. Decision Alternatives| Market (‘000)| Criterion of Realism | Criterion of Realism Decision Alternative| | Good| Fair| Poor| sama dengan (Max) + (1-)(Min)|

Small| 50| 20| –10| = (0. 8)(50) + (0. 2)(-10)| 38| Medium| 80| 30| –20| = (0. 8)(80) & (0. 2)(-20)| 60| Large| 100| 30| –40| = (0. 8)(100) + (0. 2)(-40)| 72| Very Large| 300| 25| –160| sama dengan (0. 8)(300) + (0. 2)(-160)| 208| If standards of realism decision is usually to be chosen: The decision shall be to open VERY LARGE gas station.

(f) Develop a chance loss stand.

Decision Alternatives| Working for Prospect LossMarket (‘000)| Opportunity LossMarket (‘000)| | Good| Fair| Poor| Good| Fair| Poor

Small| 300 -- 50| 31 - 20| -10-(-10)| 250| 10| 0| Medium| three hundred - 80| 30 -- 30| -10-(-20)| 220| 0| 10| Large| 300 -- 100| 30 - 30| -10-(-40)| 200| 0| 30| Very Large| 300 -- 300| 35 - 25| -10-(-160)| 0| 5| 150

(g) Precisely what is the minimax regret decision?

Decision Alternatives| Opportunity LossMarket (‘000)| Minimax Regret (Max of the Row)| | Good| Fair| Poor|

Small| 250| 10| 0| two hundred fifty

Medium| 220| 0| 10| 220

Large| 200| 0| 30| 2 hundred

Very Large| 0| 5| 150| one hundred and fifty

Chapter several – Issue 34

(a) Construct a decision tree to assist analyse the situation?

1

Payoff

$100, 1000

-$40, 000

Construct Center

30, 500

Do Nothing

30, 000

Beneficial Market (0. 5)

40, 000

No Favorable Marketplace (0. 5)

30, 500

EMV for no clinic is $0

30, 1000

Payoff

$0

1

Benefit

$100, 500

-$40, 500

Construct Center

30, 000

Do Nothing

40, 000

Good Market (0. 5)

35, 000

No Favorable Marketplace (0. 5)

30, 1000

EMV to get no medical center is $0

30, 500

Payoff

$0

(b) What should the medical professionals do?

Doctors shall be lead by the top Expected Value (EMV)

EMV if Build Clinic:

EMV = (Probability of FM x Predicted Return) & (Probability of NFM back button Expected Return) EMV = (0. 5)($100, 000) + (0. 5)($-40, 000)

EMV = $30, 000

EMV if TEND NOT TO Construct Center

EMV = 0

Therefore , the...