Operations Decision-Making SOLUTION (a) Maximum probability: Find the most likely state of nature, and choose the best alternative within that state. Most likely is [P(medium demand) = 0.5]. Choose X Co., where pay-off is Rs.50 m. (b) Expected monetary value: For each alternative, multiply the value of each possible outcome (X) by its probability of occurrence, P (X). Then sum across all outcomes, i.e., L [X. P(X)] to get the expected value, E(X), of each alternative. The alternative with the highest expected outcome is designated the expected monetary value, EMV*. E(X Co.) 10(0.3)+50(0.5) + 70(0.2)=42 E(Y Co.) = 10(0.3)+44(0.5) + 120(0.2)=43 EMY* = Rs. 43 m E(Z Co.) 0(0.3)+20(0.5) + 140(0.2) = 38 2.6 DECISION SUPPORT SYSTEM Decision support system (DSS) is computer-based systems designed to aid decision-makers of any stage of the decision process in the development of alternatives and evaluation of possible course of action. Their purpose is to provide the information and analytical support that enables managers to better control and guide the decision process. Emphasis is given for giving useful information and appropriate quantitative models that support the manager's skills. Thus, DSS are a logical extension of the managerial decision processes. This helps the managers to learn better, how to apply data processing and modeling capabilities of computers to the analysis of ill-structured and value based decisions.