EMGT 269 - Elements of Problem Solving and Decision Making
EXTRA PROBLEM 8 VALUE OF PERFECT INFORMATION
Mister Smith is trying to decide between investing $10,000 windfall into a savings account at a 10% yearly interest rate or a new stock. The return on

EMGT 269 - Elements of Problem Solving and Decision Making
EXTRA PROBLEM 9: EXPERT JUDGMENT
A manufacturer needs to make an assessment of the size of the potential market for a new product. A market analyst provides the following evaluations for the numbe

EMSE 269 - Elements of Problem Solving and Decision Making
EXTRA PROBLEM 10:
THEORETICAL PROBABILITY MODELS
In bottle production, bubbles that appear in the glass are considered defects. Any
bottle that has more than two bubbles is classified as "nonconfo

EMSE 269 - Elements of Problem Solving and Decision Making
EXTRA PROBLEM 11:
SENSTIVITY ANALYSIS
Consider the following decision tree:
PROFIT
Outcome 1
20,000
(p)
Option A
Outcome 2
2,000
(q)
Outcome 3
(0.2)
Outcome 1
-8,000
8,000
(p)
Option B
Outcome 2
(

Problem 12.2- Excel Solution
Making Hard Decisions with DecisionTools by Robert T. Clemen & Terence Reilly
#ADDIN?
20
A
A
10.0%
0
"A=20"
"A=20"
Without information, you would
choose A. The EVPI is then:
EMV(Info) - EMV(A) = 8.2-7.0 =
1.2
20.0%
0
"A=10"
"A

DEFINITIONS OF RISK
2
Abstract:
Risk-related terms such as risk factor, modifiable risk factor, demographic risk factor, risk indicator,
determinant, and risk marker are often not well defined in the literature. This short report supports the
use of a 199

EMGT 269 - Elements of Problem Solving and Decision Making
EXTRA PROBLEM 7: SENSITIVITY ANALYSIS (Problem 5.12 in the Book)
Reconsider Hugh Liedtkes Decison as diagrammed below
Accept $2 Billion
Max Result 2
Texaco Accepts $5 Billion (0.17)
5
High (p) Cou

EMSE 269 - Elements of Problem Solving and Decision Making
EXTRA PROBLEM 6:
SOLVING DECISION TREES
Read the following decision problem and answer the questions below.
A manufacturer produces items that have a probability p of being defective.
These items

EMGT 269 - Elements of Problem Solving and Decision Making
EXTRA PROBLEM 5:
DOMINANCE AND RISK PROFILES
A. Can we make a decision in the decision problem depicted in Figure 1 using
ONLY deterministic dominance considerations? Explain why or why not?
PROFI

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
Reproduced with permission of the copyright owner

Summary of Decision Analysis Applications in
the Operations Research Literature, 1990-2001
Donald L. Keefer1,
Craig W. Kirkwood1,
and
James L. Corner 2
Technical Report
Department of Supply Chain Management
Arizona State University
Tempe, Arizona 85287-47

Low
Hours Flown
Charter Price per hour
Ticket Price per hour
Occupancy Rate on Scheduled Flights
% of Charter Flights
Operating Cost per Hour
Insurance
Proportion Financed
Interest Rate
Purchase Price
Revenue From Charters
Revenue From Scheduled Flight
Fi

EMGT 269 Elements of Problem Solving and Decision Making
EXTRA PROBLEM 1: MONTHLY LOAN PAYMENT
Suppose you are planning to buy a new car. The car costs $25000, you have been approved for financing the loan with a 5 year term through the car dealer and the

EMGT 269 Elements of Problem Solving and Decision Making
EXTRA PROBLEM 2: CONSTRUCTING DECISION TREES & INFLUENCE DIAGAMS
The Executives of the general products company (GPC) have to decide which of three products to introduce, A, B, or C. Product C is es

EMGT 269 Elements of Problem Solving and Decision Making
EXTRA PROBLEM 3: PROBABILITY CALCULUS
P ( A) = 0.68
P ( B | A) = 0.30
P( B | A) = 0.02
1. Find P( A) , P ( A B) , P ( A B) 2. Use your results under 1 and complete the following
probability table
A

EMGT 269 Elements of Problem Solving and Decision Making
EXTRA PROBLEM 4: SCREENING FOR COLORECTAL CANCER
The fecal occult blood test, widely used both in physicians' offices and at home to screen patients for colon and rectal cancer, examines a patient's

Calculating Risk and Uncertainty
Abstract
Risk as uncertainty and risk versus uncertainty are the two, thoroughly antithetical, epistemologies
that underpin 20th Century economic theory, based on the distinction of uncertainty as probabilistic,
and as non