Problem 13-05 (Algorithmic)

The following profit payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Suppose that the decision maker obtained the probability assessments P(S₁) = 0.50, P(S₂) = 0.20, and P(S₃) = 0.30.

	State of Nature
Decision Alternative	S1	S2	S3
d1	150	150	75
d2	100	125	125

Use the expected value approach to determine the optimal decision.

The optimal decision is

d1d2

Problem 13-05 (Algorithmic) The following profit payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Suppose that the decision maker obtained the probability assessments P(S) = 0.50, P(S) = 0.20, and P(S3) = 0.30. Decision Alternative d1 d2 S1 d1 d2 150 100 State of Nature S 150 125 S3 75 125 Use the expected value approach to determine the optimal decision. The optimal decision is