Exam 19: Decision Analysis

Melissa Rossi, Product Manager at National Consumers, Inc.(NCI), is evaluating alternatives for introducing a new brand of toothpaste with an improved formula to promote teeth whitening.She has identified four alternative markets, and has constructed the following table which shows NCI's rewards (in $1,000,000's)for various levels of acceptance by the markets and their probabilities: The expected value of perfect information is ___.

Melissa Rossi, Product Manager at National Consumers, Inc.(NCI), is evaluating alternatives for introducing a new brand of toothpaste with an improved formula to promote teeth whitening.She has identified four alternative markets, and has constructed the following table which shows NCI's rewards (in $1,000,000's)for various levels of acceptance by the markets and their probabilities: The EMV of introducing the new package in the "Northeast only" market is ___.

Consider the following decision table with rewards in $ millions. Using the maximax criterion, the appropriate choice would be ___.

Ray Crawford is evaluating investment alternatives to invest $500,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following payoff table which shows expected profits (in $10,000's)for various market conditions: For the combination of 'Bear' and 'Mixture', the opportunity loss is ___.

Ray Crawford is evaluating investment alternatives to invest $500,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following payoff table which shows expected profits (in $10,000's)for various market conditions: The EMV of investing in Mixture is ___.

A risk-avoider decision maker will bail out of a risky scenario only if the compensation to bail out is more than the expected monetary payoff from the risky scenario.

Ray Crawford is evaluating investment alternatives for the $1000,000 which he inherited from his grandfather.His investment advisor has identified two alternatives And constructed the following tables which show (1)expected profits (in $10,000's)for Various market conditions and their probabilities, and (2)the advisor's track record on Predicting Bull and Bear markets: If the advisor predicts a Bull market the EMV of the Bonds alternative, using revised probabilities, is ___.

Ray Crawford is evaluating investment alternatives for the $1000,000 which he inherited from his grandfather.His investment advisor has identified two alternatives and constructed the following tables which show (1)expected profits (in $10,000's)for various market conditions and their probabilities, and (2)the advisor's track record on predicting Bull and Bear markets: If the advisor predicts a Bear market the EMV of the Stocks alternative, using revised probabilities, is ___.

In decision-making under risk, the expected monetary payoff of perfect information is the weighted average of the best payoff for each state of nature (using the probability of the state of nature as the weight).

In decision-making under uncertainty, the approach that considers only the best and the worst payoffs for each decision alternative is the ___.

Dan Hein owns the mineral and drilling rights to a 1,000 hectare tract of land.If he drills a well and does not strike oil his net loss will be $500,000, but if he drills a well and strikes oil his net gain will be $1,000,000.If he does not drill, his loss is the cost of the mineral and drilling rights, which amount to $10,000.For Dan's decision problem, the variable "net loss of $500,000" is one of the ___.

In a decision-making scenario, if it is not known which of the states of nature will occur but the probabilities of occurrence of the states are known.the scenario is called decision-making under risk.

Melissa Rossi, Product Manager at National Consumers, Inc.(NCI), is evaluating alternatives for introducing a new brand of toothpaste with an improved formula to promote teeth whitening.She has identified four alternative markets, and has constructed the following table which shows NCI's rewards (in $1,000,000's)for various levels of acceptance by the markets and their probabilities: If Melissa uses the EMV criterion, the appropriate choice would be: ___.

Melissa Rossi, Product Manager at National Consumers, Inc.(NCI), is evaluating alternatives for introducing a new brand of toothpaste with an improved formula to promote teeth whitening.She has identified four alternative markets, and has constructed the following table which shows NCI's rewards (in $1,000,000's)for various levels of acceptance by the markets and their probabilities: The EMV of introducing the new package in the "National" market is ___.

Consider the following decision table with rewards in $ millions. Using the maximin criterion, the appropriate choice would be ___.

The expected monetary value without information is $2,500, and the expected monetary payoff with perfect information is $5,000.The expected value of perfect information is ___.

In a decision-making under uncertainty scenario using the strategy of minmax regret, all the entries in the opportunity loss table must be zero or positive.