Decision Analysis Essays

Words: 22397
Pages: 90
Open Document
ASW/QMB-Ch.04 3/8/01 10:35 AM Page 96

Chapter 4

DECISION ANALYSIS

CONTENTS 4.1 PROBLEM FORMULATION Influence Diagrams Payoff Tables Decision Trees DECISION MAKING WITHOUT PROBABILITIES Optimistic Approach Conservative Approach Minimax Regret Approach DECISION MAKING WITH PROBABILITIES Expected Value of Perfect Information RISK ANALYSIS AND SENSITIVITY ANALYSIS Risk Analysis Sensitivity Analysis DECISION ANALYSIS WITH SAMPLE INFORMATION An Influence Diagram A Decision Tree Decision Strategy Risk Profile Expected Value of Sample Information Efficiency of Sample Information COMPUTING BRANCH PROBABILITIES

4.2

4.3 4.4

4.5

4.6

Decision analysis can be used to determine an optimal strategy when a decision maker is faced …show more content…
ASW/QMB-Ch.04 3/8/01 10:35 AM Page 98

98

QUANTITATIVE METHODS FOR BUSINESS

Influence Diagrams
An influence diagram is a graphical device that shows the relationships among the decisions, the chance events, and the consequences for a decision problem. The nodes in an influence diagram are used to represent the decisions, chance events, and consequences. Rectangles or squares are used to depict decision nodes, circles or ovals are used to depict chance nodes, and diamonds are used to depict consequence nodes. The lines connecting the nodes, referred to as arcs, show the direction of influence that the nodes have on one another. Figure 4.1 shows the influence diagram for the PDC problem. The complex size is the decision node, demand is the chance node, and profit is the consequence node. The arcs connecting the nodes show that both the complex size and the demand influence PDC’s profit.

Payoff Tables
Given the three decision alternatives and the two states of nature, which complex size should PDC choose? To answer this question, PDC will need to know the consequence associated with each decision alternative and each state of nature. In decision analysis, we refer to the consequence resulting from a specific combination of a decision alternative and a state of nature as a payoff. A table showing payoffs for all combinations of decision alternatives and states of nature is a payoff table. Because PDC wants to select the complex size that provides the largest
Show More

Related Documents: Decision Analysis Essays

Decision Analysis Essay

Decision Analysis Decisions for Decision Theory Approach 1. Set of possible future conditions exist that will have a bearing on the results of the decision 2. A list of alternatives for manager to choose from 3. A known payoff for each alternative under each possible future condition 2 Concepts • Problem Formulation • Decision Making without Probabilities • Decision Making with Probabilities • Risk Analysis and Sensitivity Analysis • Decision Analysis with Sample Information • Computing…

Words 2264 - Pages 10

Decision Analysis Essay

Legal Issues Sales of Goods Act Under the sales of goods act, Coast Hotel has the right to refuse the usage of Royal Doulton’s product upon delivery, due to miss-description of the product. The goods were purchased by description and sample, what was delivered did not match the description, and the sales of good act implies conditions into the contract that permit the purchaser to refuse delivery. Sale of description not only covers situations where one item is being purchased from a catalogue…

Words 574 - Pages 3

Decision Analysis Task 2

Decision Analysis Task 2: A. Develop a distribution pattern that meets availability and demand constraints and minimizes total shipping costs for Shuzworld, utilizing the appropriate decision analysis tool. Your current distribution pattern should have Shanghai shipping 1300 units to Warehouse 2, Shuzworld H shipping 300 units to Warehouse 1, 200 units to Warehouse 2 and 1800 units to Warehouse 3, and Shuzworld F shipping 2200 units to Warehouse 1. This transportation plan results in an Optimal…

Words 2111 - Pages 9

Business Analysis And Decision Making

MN101: Business Analysis and Decision Making Lecture 2 handout: How can a Value Added Framework explain the reduction in the UK Manufacturing Sector? 1. Aims: • To introduce the use of the value added framework. • To understand the process of wealth creation. • Appreciate the importance of sales and value added. • Present a basis for discussion in the workshops. 2. Context/scope: • Lecture presents a method of analysis which all will become familiar by the end of the…

Words 1459 - Pages 6

Elderly Care Decision Analysis

ELDER CARE DECISION-MAKING PROCESS How to cope with the decision and guilt that is associated with placing our loved ones in a nursing home? Guilt is one emotion that nearly anyone caring for vulnerable people is faced with. We feel guilty about a decision to take action or not to take action. We feel regretful about deciding to keep trying. We feel regretful about asking or not asking for others assistance in the process. But, we should know that it is human to feel guilty as a caregiver, even if…

Words 688 - Pages 3

Analysis: Life Altering Decision

Life-Altering Decision Sheena Smith MGT/230 November 25, 2013 Daniel Boose Life comes with numerous opportunities to make simple and complex decision. The key is the way an individual goes about making the decision can determine ones path. In my life there has been some difficult decision that I have made some were hasty others were well thought out but either way it has taken me on an interesting path. Problem I grew up in a strict religious household with my month…

Words 389 - Pages 2

Romeo And Juliet Decision Analysis

in various amount of ways, however, when reading most decisions shape what can happen next. What the characters do or what they intend to do is able to entirely flip the story and modify it in some type of way. Although, all decisions can never lead to the best outcome- which is clearly shown in this storyline. All characters depend on what can happen next and how one sets the plot for the readers. As in “Romeo and Juliet,” making quick decisions can lead to bad outcomes. When reading “Romeo and…

Words 899 - Pages 4

Ethical Decision-Making Analysis

Discussion 1 Ethical decision-making according to the APA Ethics Code seems to be overwhelming as a clinical psychology student currently undergoing training. Understandably so, there is a lot of grey area and no clear white and black picture. I think the grey area is essential because it allows psychologists to make decisions according to the situation at hand while taking into consideration the APA Ethics Code, the law, culture, moral principles, etc. As the reading indicated, each ethical challenge…

Words 888 - Pages 4

Supervisory Decision-Making Analysis

Chapter #9 Discussion Forum - Advice on Supervisory Decision Making 1. There are six steps in our book for the rational of good decision making. The first being Identifying the Problem, finding the underlying issued that needs to be resolved. (Certo, 2015) Our book states that the supervisor often notices the problem but what is not stated is that many times upper management will notice the problem and hand down orders. It will then be up to the supervisor to resolve the problem. A following step…

Words 934 - Pages 4

Critical Incident Decision-Making Analysis

wrote: “Critical incident decision making the most effective model of decision-making I presume. There is no any other option at time of critical incidents than critical incident decision making. But the naturalistic decision making is about how individuals make decisions in the real world environment.” I understand your analysis of both naturalistic, and critical incident decision making, however, I disagree with your presumption that stated critical incident decision-making is the most effective…

Words 434 - Pages 2