Payoff table for the two alternative courses of action Courses of action States of nature Occurrence of low demand Occurrence of high demand Occurrence of low demand Occurrence of high demand Occurren
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Abu Dhabi School of Management Decision Analysis Individual out of class assessment May 2018 Q1 Payoff table for the two alternative courses of action The probability of low demand occurring is 0.6 The probability of high demand occurring is 0.4 Construction of the payoff table for the two alternate causes of action Courses of action States of nature Occurrence of low demand Occurrence of high demand A Step by step introduction $ 50,000 $ 700,000 A concentrated introduction -$ 600,000 $ 1,000,000 Probability 0.6 0.4 The optimal decision based on the Maximax
Payoff table for the two alternative courses of action Courses of action States of nature Occurrence of low demand Occurrence of high demand Occurrence of low demand Occurrence of high demand Occurren
Added on 2021-05-31
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Abu Dhabi School of ManagementDecision AnalysisIndividual out of class assessmentMay 2018
Q11.Payoff table for the two alternative courses of actionThe probability of low demand occurring is 0.6The probability of high demand occurring is 0.4Construction of the payoff table for the two alternate causes of actionCourses of actionStates of natureOccurrence of lowdemandOccurrence of high demandA Step by step introduction$ 50,000$ 700,000A concentrated introduction-$ 600,000$ 1,000,000Probability0.60.42.The optimal decision based on the Maximax CriterionUnder the Maximax criterion the decision maker optimizes his/her profit by selectingthe maximum profit out of the maximum profits under each state of natureThe payoff tableCourses of actionStates of natureOccurrence of lowdemandOccurrence of high demandMaximumA Step by step introduction$ 50,000$ 700,000$ 700,000A concentrated introduction-$ 600,000$ 1,000,000$ 1000,000Probability0.60.4Under this criterion the optimal course of action will be a concentrated introduction of the new brand of washing machine.3.Optimal decision based on the Maximin CriterionUnder the Maximin criterion, the decision that maximizes the profit is to select the outcome that maximizes the minimum profits under each state of natureThe payoff
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