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Decision_Analysis_Solutions

# Decision_Analysis_Solutions - Decision Analysis Solutions 1...

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Decision Analysis Solutions 1. # of books to order # of sections offered 7 8 9 10 550 \$5500 \$5300 \$5100 \$4900 600 \$5200 \$6000 \$5800 \$5600 650 \$4900 \$5700 \$6500 \$6300 700 \$4600 \$5400 \$6200 \$7000 a. Maximax: Alternative Best Payoff 550 books \$5500 (Max. of 5500, 5300, 5100, 4900) 600 \$6000 (Max. of 5200, 6000, 5800, 5600) 650 \$6500 (Max. of 4900, 5700, 6500, 6300) 700 \$7000 * (Max. of 4600, 5400, 6200, 7000) Decision: Order 700 books; EV = \$7000 b. Maximin: Alternative Worst Payoff 550 books \$4900 (Min. of 5500, 5300, 5100, 4900) 600 \$5200* (Min. of 5200, 6000, 5800, 5600) 650 \$4900 (Min. of 4900, 5700, 6500, 6300) 700 \$4600 (Min. of 4600, 5400, 6200, 7000) Decision: Order 600 books; EV = \$5200 c. Laplace: Alternative Average Payoff 550 books \$5200 (5500 + 5300 + 5100 + 4900)/4 600 \$5650 (5200 + 6000 + 5800 + 5600)/4 650 \$5850* (4900 + 5700 + 6500 + 6300)/4 700 \$5800 (4600 + 5400 + 6200 + 7000)/4 Decision: Order 650 books; EV = \$5850 2.

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Decision_Analysis_Solutions - Decision Analysis Solutions 1...

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