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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...

 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.

  1. What is the problem and objective of this decision?
  2. Identify at least three alternatives and three states of nature.
  3. Make a decision table in Excel QM. See video in Live Binder.
  4. What are the potential payoff/losses for each alternative and state of nature?
  5. Choose two of the five decision strategies, and solve it in Excel QM. State the best alternative for each strategy.
  • Optimistic
  • Pessimistic
  • Criterion of realism (Hurwicz)
  • Equally likely (Laplace)
  • Minimax regret
  1. Why did you choose the two strategies? What are the results of the best alternative? What is your final decision?

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