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Mat 540 Week 2 Homework

# 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
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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• Spring '14
• AngelaMurtagh
• Minimax, Info-gap decision theory, Loss function

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