Based on Module A

Question $1($Due: Before $9/5$ class$)$: An entrepreneur wants to evaluate a set of business strategies that have some monetary implication for her business. The table below summarizes the payoffs $($or losses$)$ to the business under the four strategy choices $($Alternative A$,$ B$,$ C$,$ and D$)$ in the four possible states of nature. The four states of nature represent the four levels of consumer acceptance of the strategies of the business. Based on the data of the table below, answer the questions that are given below:

States of Nature

$1234$

Alternative A $48525868$

Alternative B $403089135$

Alternative C $68736571$

Alternative D $-110-8135210$

a$.$ Assuming that a maximax strategy is employed, which alternative would be chosen?

If Maximax strategy is employed the alternative would be $210$ because it is that maximum number with the highest possible gain.

b$.$ If maximin is to be utilized, which would be chosen?

If we use maximin, $-110$ would be chosen by it is the number with the least possible amount of loss.

c$.$ If the states of nature are equally likely, which alternative should be chosen?

If they are equally likely we would choose $82\mathrm{.}5,$ you will see my work attached.

Upload your work to HW$1$ folder $($under Assessment$).$

Homework $2($Due: Before $9/5$ class$)$: Create a decision tree for the above problem. Upload your work to HW$2$ folder $($under Assessment$).$

Homework $3($Due: Before $9/5$ class$)$: An entrepreneur wants to evaluate a set of business strategies that have some monetary implication for her business. The table below summarizes the payoffs $($or losses$)$ to the business under the four strategy choices $($Alternative A$,$ B$,$ C$,$ and D$)$ in the four possible states of nature. The four states of nature represent the four levels of consumer acceptance of the strategies of the business. The probabilities of the states of nature$1,2,3,$ and $4$ are $0\mathrm{.}1,0\mathrm{.}2,0\mathrm{.}3,$ and $0\mathrm{.}4,$ respectively. Upload your work in HW $3$ folder.

States of Nature

$1234$

Alternative A $48525868$

Alternative B $403089135$

Alternative C $68736571$

Alternative D $-110-8135210$

a$)$ Use the EMV method to find the best alternative.

b$)$ Create a decision tree for the above problem.