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Decision Support Tools- Assignment

14 Pages1626 Words269 Views

Added on  2019-10-31

Decision Support Tools- Assignment

   Added on 2019-10-31

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Decision Support Tools- Assignment_1
Question 1(a) There are differences in the decision making under the three scenarios which arepresented below (Eriksson & Kovalainen, 2015).b) 1) The optimist would choose share market as it can deliver maximum returns as indicatedbelow.2) The choice of the pessimist would be bonds as in a negative market, these would deliverthe highest return.3) The respective regret matrix has been indicated below based on which real estate emergesas the superior choice.
Decision Support Tools- Assignment_2
4) Based on the respective probabilities for the market, the EMV has been computed belowwhich indicated that bonds is the preferred choice.5) The expected value of perfect information or EVPI can be estimated in the manner indicated below (Hair et. al.,2015).EVPI = 80,000*0.3 + 20,000*0.7 – 23,000 = $ 15,000Question 2(a)The relevant table available for Jerry to make a prudent decision in the given situation is indicated below.EMV for a large shop = 80000*0.5 + (-40000)*0.5 = $ 20,000
Decision Support Tools- Assignment_3
EMV for a small shop = 30000*0.5 + (-10000)*0.5 = $ 10,000Considering that the EMV is higher in case of a large shop, hence Jerry should choose to set up a large shop only.(b) The respective outcomes along with the respective probabilities are captured in the tablebelow.Probability Revision (Favourable Study)Probability Revision (Unfavourable Study)c) Posterior probability computations are highlighted below.
Decision Support Tools- Assignment_4

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