Decision Support System PDF

Added on - 28 Mar 2020

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DECISIONSUPPORT SYSTEM[Pick the date]Student id and name
Question 1(a)The decision making under different situations has significant differences outlined below.“Decision making under certainty”- In this, a host of reliable information is available inrelation to the future and the present and hence the decision making is neither challenging,nor time consuming. Also, considering that these are frequently made decisions, hence clearguidelines or processes are available to take decision in such situations(Holsapple &Whinston, 2013).“Decision making under risk” - In this, the information is limited in scope but based on thesame various alternatives are clear and also the subjective probabilities can be ascertainedwith reasonable accuracy. In relation to tools, mathematical models are frequently usedwhich mirror the future possibilities in terms of monetary values based on inputs fromdecision makers thus aiding decision making (Medhi, 2001).“Decision making under complete uncertainty” – In this, no reliable information is availablewith regards to the likely outcomes and their respective probabilities. These decisions areexceptionally difficult to rake and time consuming as the approach becomes very critical inthe lack of other tools to rely on. Creativity in outlook and approach is required for decisionmaking. However, these decisions are quite infrequent.(b)Results(1)Optimist would chose “share market” because it provide maximum profit as shown inthe table.(2)Optimist would chose “bonds” as shown in the table.(3)“Real Estate” would be as per the impact of criteria of regret as shown in the table.1|P a g e
(4)Expecte d monetary value for all the three investment option which are represented in thetable highlighted below:After analyzing the above table and computation, it can be said that “bonds investment” hasmaximum value of expected monetary value and hence, it should be chosen for investment.(5)EVPI“Expected value of perfect information”is computed as shown below:2|P a g e
Question 2(a)Jerry has two options of shop i.e. large shop and small shop to start his bicycle business.The selection of best suitable option between these two would be mainly depends on theprofit value. Shop with high profit would be considered.Large shop is provided high profit ($20,000) for Jerry and hence, he should select large shop tostart his bicycle business.(b)For good and poor market the prior probability revision table is shown below:Favorable study Prior probability revisionUnfavorable study Prior probability revision3|P a g e
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