Linear Prog COP4355_Part_44

Linear Prog COP4355_Part_44 - Chapter 15 Decision Analysis...

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180 Chapter 15 Decision Analysis 15.12 (continued) (c) Optimal act: order small computer now, switch to large computer if 2 or more contracts are received. Expected profit: $13,000. (d) and (e) For the risk avoider, the expected utilities are: (.5)(.8) + (.4)(.5) + (.1)(.85) = .685, (.5)(0) + (.4)(.65) + (.1)(.90) = .350, (.5)(.30) + (.4)(.80) + (.1)(.95) = .565 The optimal act is to purchase the small computer. For the risk seeker, the expected utilities are: (.5)(.2) + (.4)(.10) + (.1)(.30) = .170 (.5)(0) + (.4)(.15) + (.1)(.40) = .100 (.5)(.05) + (.4)(.20) + (.1)(.65) = .170 The small computer and the time sharing system are equally attractive to the risk seeker. (The utility values are estimates; your values may differ slightly.)
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Solutions Manual and Workbook 181 DECISIONS USING IMPERFECT INFORMATION 15.13 (a) (b) $1.5 million; add both routes (c) EVPI = EV(Regret) = $1 million (d)
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182 (f) Add both A and B; expected Profit: $3.25M; expected Regret: $.5M. (g) EVSI = $1.5M - $1.5M = 0. Alternatively, EVSI = EV(Regret)prior – EV(Regret) with added information: EVSI = $1M - $1M = 0.
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This note was uploaded on 11/13/2011 for the course COP 4355 taught by Professor Koslov during the Spring '10 term at University of Florida.

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Linear Prog COP4355_Part_44 - Chapter 15 Decision Analysis...

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