153.HW1.SUM07 - Introduction to Decision Making in...

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Introduction to Decision Making in Organizations (MS&E153) Summer 2007 Homework Assignment #1: Due Thursday, July 5 th (4:00 PM in 300-300 in person OR by email to: ghraban@stanford.edu) Question 1 (15 pts.) Using concepts presented in class, identify a decision that is both organizationally and technically complex and explain why using specific examples. Question 2 (10 pts.) Assume you are the decision-maker facing the Plant Capacity Problem (presented in the first lecture). What is the maximum amount you should pay for an imperfect market test that correctly predicts demand with 40% probability (whether demand is high or low)? What is the most you should pay for a test that correctly predicts demand with probability 50%? Question 3 (15 pts.) Draw a decision quality diagram for a personal decision you recently made, such as your decision to take this course. Give reasons for your assessments on each dimension. Question 4 (20 pts.)
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