A payoff table is given as s1 s2 s3 d1 250 450 500 d2 300 -250 900 d3 400 500 800 In each part of your answer, show the work you relied upon to reach your answer. What decision should be made using expected value, in which the probabilities are s1=.3, s2=.2, s3=.5? What decision should be made by the conservative decision-maker? What choice should be made using the Hurwicz method, in which the coefficient of optimism (or realism) is .6? (hint: ignore the middle state of nature in performing the calculation).

A payoff table is given as s1 s2 s3 d1 250 450 500 d2 300 -250 900 d3 400 500 800 In each part of your answer, show the work you relied upon to reach your answer. What decision should be made using expected value, in which the probabilities are s1=.3, s2=.2, s3=.5? What decision should be made by the conservative decision-maker? What choice should be made using the Hurwicz method, in which the coefficient of optimism (or realism) is .6? (hint: ignore the middle state of nature in performing the calculation).

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.2: Elements Of Decision Analysis

Problem 1P

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