Linear Prog COP4355_Part_45

# Linear Prog COP4355_Part_45 - EVSI 2 = \$80 \$75.20 = \$4.80...

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184 Chapter 15 Decision Analysis 15.16 (continued) (e) If the prediction is “Good,” rent; if it is “Bad,” sell. (f) EVSI = \$1,230 - \$1,100 = \$130 or: EVSI = \$300 - \$170 = \$130. (g) Efficiency = EVSI \$130 = = 43.3% EVPI \$300 32 8 40 18 42 60 50 60 100 Actually Good Actually Bad Prediction Good Bad Given: P(PG/G) = .8 P(PB/B) = .7 32 Revised:P(G/PG) = = .64 50 18 P(B/PG) = = .36 50 8 P(G/PB) = = .16 50 42 P(B/PB) = = .84 50

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Solutions Manual and Workbook 185 SAMPLE SIZE DETERMINATION 15.17
186 Chapter 15 Decision Analysis 15.17 (continued) (a) Accept (b) \$80 (c) EVSI 1 = \$80 - \$80 = 0

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Unformatted text preview: EVSI 2 = \$80 - \$75.20 = \$4.80 EVSI 3 = \$80 - \$74.56 = \$5.44 Solutions Manual and Workbook 187 15.17 (continued) (d) Optimal sample size is n = 2. ENGS = \$4.80 - \$4.00 = \$.80 For larger sample sizes, the cost of sampling is greater than the cost saving. (e) \$4.80/\$80 = .06 Note that a sample of n = 1 does not change our optimal act. The expected profit is \$80. 15.18 Maximax – Large; Maximin – Small; Hurwicz ( α = 0.4) – Large;Savage – Medium; LaPlace – Medium. EV – 70, Medium....
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Linear Prog COP4355_Part_45 - EVSI 2 = \$80 \$75.20 = \$4.80...

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