Linear Prog COP4355_Part_43

Linear Prog COP4355_Part_43 - Chapter 15 Decision Analysis...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
176 Chapter 15 Decision Analysis 15.8 (continued) (d) Under perfect information, If outcome is G, select B If outcome is F, select C (e) EVPI = 4 – 0 = 4 Value of probability of outcome G that makes alternatives B and C equally attractive is: 60(P) + (-20)(1-P) = 40(P) + (-10)(1-P) 80P – 20 = 50P – 10 30P = 10 P = 1 3 15.9 (a) Optimal alternative = B (b) Expected value of payoff = 44 (c) Expected regret = 2 A C G F B . 8 2 20 26 44 30 16 2 30 30 P R -20 10 0 60 -20 10 40 20 -10 0
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Solutions Manual and Workbook 177 15.9 (d) Under perfect information, If outcome is G, select B If outcome is F, select C (e) EVPI = 46 – 44 = 2 or EVPI = 2 – 0 = 2 A C G .8 B F .2 G 0 B F 1 G 1 B F 0 F 0 G . 8 F 2 D e c i s o n u d r Prior info. Decide using perfect info 20 26 44 2 30 0 0 16 30 30 60 40 20 -20 10 -20 10 -10 P R 30 30 -20 10 0 60 10 -20 20 40 -10 0 30 30 -20 10 60 0 -20 10 40 20 -10 0 30 30 -20 10 60 0 -20 10 40 20 -10 0 46 0
Background image of page 2
178 Chapter 15 Decision Analysis DECISIONS UNDER PRIOR AND PERFECT INFORMATION 15.10 (a)and (b) (c) Expected payoff: $600,000; expected regret: $220,000; Optimal choice is to settle out of court. (e) EVPI – EV(Regret) = $220,000 t r i a l s e . 1 .2 3 4 Regret Payoff $ 0 $ 2M $ 1M $ 0 $.5M $.1M $ 0 $.6M $.6M $.6M $.6M $.6M $ 0 $ 0 $.4M $ 1.4M $.55M
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

Linear Prog COP4355_Part_43 - Chapter 15 Decision Analysis...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online