chapter 4 decision anaylsis

# chapter 4 decision anaylsis - 1 In the following profit...

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1) In the following profit payoff table for a decision problem with two states of nature and three decision alternatives, the prior probabilities are (ps1)=0.8 and p(s2)=0.2 States of nature are (s1/d1) 15, (s1/d2) 10, (s1/d3) 8 (s2/d1) 10 (s2/d2)12 (s2/d3) 20 a. What is the optimal decision based on expected value? b. Find EVPI. c. Suppose that sample information I is obtained with p(I/s1)=0.2 and p(I/s2)=0.75. find P(I)using the multiplication rule, and then find the posterior probabilities, p(s1/I) and p(s2/I) using bayes theorem d. What is the optimal decision based on expected value using the sample information. Construct a tree diagram to aid you. e. Find EVSI f. Find the efficiency of the dample information. (E) 2) Amy Lloyd is interested in leasing a new Saab and has contacted three automobile dealers for pricing information. Each dealer offered Amy a closed-end 36-month lease with no down payment due at the time of signing. Each lease includes a monthly charge and a mileage allowance. Additional miles receive a surcharge on a per-mile basis. The

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## This note was uploaded on 03/02/2012 for the course MATH 101 taught by Professor Partialfractions during the Spring '11 term at Hawaii.

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chapter 4 decision anaylsis - 1 In the following profit...

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