If you were a business owner faced with an important decision that could potentially be very lucrative. Keep in mind the "Six Steps in Decision Making" set up a decision analysis.
- What is the problem and objective of this decision?
- Identify at least three alternatives and three states of nature.
- Make a decision table in Excel QM. See video in Live Binder.
- What are the potential payoff/losses for each alternative and state of nature?
- Choose two of the five decision strategies, and solve it in Excel QM. State the best alternative for each strategy.
- Criterion of realism (Hurwicz)
- Equally likely (Laplace)
- Minimax regret
- Why did you choose the two strategies? What are the results of the best alternative? What is your final decision?
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