Notes - Notes TESTS Make sure to explain exactly how you...

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Notes TESTS: Make sure to explain exactly how you got your answers (explanations and equations). Even if you did not get the exact answer, your reasoning might still give you credit. Monday, August 29, 2011 Chapters 1, 2, A: Decision Analysis Decision Approaches 1. Decide what your objective is. There is no limit, but there needs to be a goal. a. Optimization (more mathematical) - best of all approaches b. Heuristic c. Simulation Environment 1. Certainty 2. Uncertainty 3. Risk (every situation) Tools 1. Decision Matrix (Table) 2. Decision Tree Decision Criteria 1. Maximum (best of worst) – pessimist criteria; risk avoider 2. Minimum (best of best) – optimist criteria; risk seeker 3. Expected Value (Laplace) – aka, Probability * # of Outcomes Wednesday, August 31, 2011 States of Nature↕ Alternatives↔ Rain .4 No rain .6 bring 8 7 bring 1 10 Worst Best Equal Value 7 8 7.4 1 10 6.4 Bring Don’t bring On POM, go to Decision Analysis, New à Decision Table or Decision Tree.
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***Expected Value is NOT on the exam!!!*** Wednesday, September 7, 2011 Forecasting Approaches
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