Exam 20: An Introduction to Decision Theory

The national sales manager for "I colored this" (ICT) T-shirts, provides all salespersons with the payoff table shown below, giving the estimated profit when a retailer purchases from 1 to 4 dozen T-shirts. The probability of demand for each state of nature is also shown. What is the expected payoff for purchasing 3 dozen T-shirts?

The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Since this seedless watermelon costs $4, will sell for $7, and is highly perishable, he only expects to sell between 6 and 9 of them. What is the opportunity loss for purchasing 6 watermelons when the demand is for 8 watermelons?

The national sales manager for "I colored this" (ICT) T-shirts, provides all salespersons with the payoff table shown below, giving the estimated profit when a retailer purchases from 1 to 4 dozen T-shirts. The probability of demand for each state of nature is also shown. How many dozen "I colored this" T-shirts should be purchased to yield the highest expected monetary value?

A person is trying to decide if they should buy a lottery ticket.The ticket costs $1.00.If the ticket is a winner, the prize would be $10,000.Knowing that winning $10,000 is not a certain outcome (state of nature), the person finds that the probability of winning is 0.0009.Based on this information, the following payoff table can be constructed: What is the probability of losing $1.00?

The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Since this seedless watermelon costs $4, will sell for $7, and is highly perishable, he only expects to sell between 6 and 9 of them. What is the opportunity loss for purchasing 7 watermelons when the demand is for 9 watermelons?

Which decision making strategy maximizes the minimum gain? _____________

A person is trying to decide if they should buy a lottery ticket.The ticket costs $1.00.If the ticket is a winner, the prize would be $10,000.Knowing that winning $10,000 is not a certain outcome (state of nature), the person finds that the probability of winning is 0.0009.Based on this information, the following payoff table can be constructed: Based on the expected monetary value of buying a ticket, what is the best decision?

The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Since this seedless watermelon costs $4, will sell for $7, and is highly perishable, he only expects to sell between 6 and 9 of them. What is the opportunity loss for purchasing 8 watermelons when the demand is for 8 watermelons?

You have four different strategic business plans you can select to implement against your competitors.You estimate that the probability that the competitors are aware of your strategies is 0.3 and 0.7 that they are unaware.The payoffs are estimated for each scenario. What is the maximax choice?

The national sales manager for "I colored this" (ICT) T-shirts, provides all salespersons with the opportunity loss table showing the potential lost profit for each purchase decision or act from 1 to 4 dozen T-shirts. The probability of demand for each state of nature is also shown. What is the expected opportunity loss of purchasing 3 dozen T-shirts?

What is the purpose of sensitivity analysis in decision theory?

The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Since this seedless watermelon costs $4, will sell for $7, and is highly perishable, he only expects to sell between 6 and 9 of them. What is the opportunity loss for purchasing 8 watermelons when the demand is for 9 watermelons?

__________________ examines the effect that changes in the probabilities for states of nature have on selecting an alternative or act.

The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Since this seedless watermelon costs $4, will sell for $7, and is highly perishable, he only expects to sell between 6 and 9 of them. What is the payoff value for the purchase of 9 watermelons when the demand is for 7 watermelons?

The maximin strategy is a __________ strategy for decision making.