You are a business owner faced with an important decision that could potentially be very lucrative. Keep
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Question:
You are a business owner faced with an important decision that could potentially be very lucrative. Keep in mind the "Six Steps in Decision Making" as you set-up your decision analysis.
- What is the problem and objective of this decision?
- Identify at least 3 alternatives and 3 states of nature.
- Create a decision table in Excel.
- Identify the potential payoff/losses for each alternative and state of nature and include in your decision table.
- Choose two decision strategies and determine the best alternative: (Clearly state the best alternative for each strategy.)
- 1) Optimistic
- 2) Pessimistic
- 3) Criterion of Realism (Hurwicz)
- Why did you choose the two strategies? What are the results of the best alternative? What is your final decision?
Related Book For
Business Statistics for Contemporary Decision Making
ISBN: 978-0470910184
6th Edition
Authors: Ken Black
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