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Mat 540 Week 2 Homework - Decision Investment Motel...

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States of Nature Decision Gasoline Availablity Investment Shortage Stable Supply Surplus Maximum Minimum Motel -$7,500 $12,000 $23,000 $23,000 -$7,500 Restaurant $3,000 $7,000 $6,500 $7,000 $3,000 Theater $5,000 $6,000 $4,000 $6,000 $4,000 Maximax decision = $23,000 Maximin decision = $4,000 Regret Table States of Nature Decision Gasoline Availablity Investment Shortage Stable Supply Surplus Maximum Motel $12,500 $0 $0 $12,500 Restaurant $2,000 $5,000 $16,500 $16,500 Theater $0 $6,000 $19,000 $19,000 Minimax regret = $12,500 Hurwicz alpha = 0.3 Decision: Theater 1 - alpha = 0.7 Motel $1,650 Restaurant $4,200 Theater $4,600 Equal Likelihood Motel $9,167 Decision: Motel Restaurant $5,500 Theater $5,000
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Summary Decision a) maximax $23,000 Motel b) maximin $12,500 Theater c) minimax regret Restaurant Motel or Restaurant d) Hurwicz (alpha = 0.4) $41,400 Theater e) Equal Likelihood $14,000 Motel
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Decision Tables Data Profit Rain Overcast Sunshine EV Probability 0.35 0.25 0.4 Sun Visor 410 Sun Visors -400 -200 1500 Umbrella 415 Umbrellas 2100 0 -800 Opportunity Loss Table Rain Overcast Sunshine EOL Probability 0.35 0.25 0.4 Sun Visor 925 Sun Visors 2500 200 0 Umbrella 920 Umbrellas 0 0 2300 Decision: Umbrella Minimize your Expected Opportunity Loss
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Real estate Development
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