Extra Problem 5- Dominance and Risk Profiles - Solution Key

Extra Problem 5- Dominance and Risk Profiles - Solution Key...

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EMSE 269 - Elements of Problem Solving and Decision Making Instructor: Dr. J. R. van Dorp 1 EXTRA PROBLEM 5: DOMINANCE AND RISK PROFILES (2) A. Can we make a decision in the decision problem depicted in Figure 1 using deterministic dominance considerations? Explain why or why not? ONLY PROFIT PROFIT 9 3 2 1 (0.30) (0.30) (0.70) (0.50) (0.50) (0.50) A B FIGURE 1
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EMSE 269 - Elements of Problem Solving and Decision Making Instructor: Dr. J. R. van Dorp 2 YES, THE WORST OUTCOME OF OPTION A EQUALS 3, THE BEST OUTCOME OF OPTION B, EQUALS 2, WHICH IS WORSE THAN THE PREVIOUS BEST OF OPTION A. HENCE, OPTION A DETERMINISTICALL DOMINATES OPTION B AND IS PREFERRED. (5) B. How many cumulative risk profiles can be drawn for the tree in Figure 2 and give an explanation (DO NOT DRAW THE CUMULATIVE RISK PROFILES). ALTERNATIVE SYSTEM A : 1 STRATEGY ( ) DARK BLUE COLOR ALTERNATIVE SYSTEM B: 2 STRATEGIES ( AND COLOR) RED GREEN ALTERNATIVE SYSTEM C: 2 STRATEGIES ( AND COLOR) MAGENTA CYAN TOTAL : 5 SRATEGIES
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EMSE 269 - Elements of Problem Solving and Decision Making Instructor: Dr. J. R. van Dorp
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Extra Problem 5- Dominance and Risk Profiles - Solution Key...

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