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Decision Support ToOLS Undertaking Complexity: A Survey

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Added on  2020-03-28

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5) Probability of a good economy = 0.3 Probability of a poor economy = 0.7 Best outcome in a good economy = $ 80,000 (stocks) Best outcome in a poor economy = $ 20,000 (bonds) OH EVPI = (0.3*80000) + (0.7*20000) – 23000 Computing the above, EVPI= $ 15,000 Question 2 The expected monetary value is captured in the following table. d) Favourable Outcome (Expected Utility) Unfavourable Outcome (Expected

Decision Support ToOLS Undertaking Complexity: A Survey

   Added on 2020-03-28

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DECISION SUPPORTTOOLSSTUDENT ID:[Pick the date]
Decision Support ToOLS Undertaking Complexity: A Survey_1
Question 1(a) Certain differences which are prevalent between the decision making under givensituations are as follows (Eriksson & Kovalainen, 2015).1)The decision making under certainty is the least strenuous since all the reliableinformation is already present and thus decision making is very straightforward. Theunderlying complexity tends to increase in case of decision under risk as the outcomesare probabilistic. However, the complexity reaches the highest level for completeuncertainty decision making due to absolute absence of credible information.2)Further, for decision under certainty, there are established procedures along withconventions which provide the decision. However, in case of decision under risk, themathematical and computational tools are deployed so as to compute the outcome ofthe various possible alternatives in financial terms. But for decision making whencomplete uncertainty prevails, then the input based conventional tools do not yieldresult and the decision maker would deploy more creative approaches along withintuition (Hair et. al., 2015).b) 1) Optimist – Preferred choice stock market2) Pessimist- Preferred choice bonds3) Regret Matrix Criterion – Preferred choice real estate
Decision Support ToOLS Undertaking Complexity: A Survey_2
4) EMV Criterion – Preferred choice is bonds.5) Probability of a good economy = 0.3Probability of a poor economy = 0.7Best outcome in a good economy = $ 80,000 (stocks)Best outcome in a poor economy = $ 20,000 (bonds)EVPI = (0.3*80000) + (0.7*20000) – 23000 Computing the above, EVPI= $ 15,000Question 2(a)The expected monetary value computation is captured in the following table.As the EMV is higher for a larger shop, hence Jerry should open the same to maximise gains.
Decision Support ToOLS Undertaking Complexity: A Survey_3
(b) The accuracy of the market research offered by the friend is highlighted as follows.Favourable Study (Probability Revision)Unfavourable Study (Probability Revision)c) Computation of posterior probability
Decision Support ToOLS Undertaking Complexity: A Survey_4

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