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stat discussion 6

Scenario: You are a business owner faced with an important decision that could potentially be very lucrative. Keep in mind the “Six Steps in Decision Making” (textbook reference) as you set up your decision analysis.

What is the problem and objective of this decision?
Identify at least three alternatives and three states of nature.
Create a decision table in Excel QM. See video in Live Binder.
What are the potential payoff/losses for each alternative and state of nature?
Choose two of the five decision strategies, and solve it in Excel QM. State the best alternative for each strategy.

Optimistic
Pessimistic
Criterion of realism (Hurwicz)
Equally likely (Laplace)
Minimax regret

Why did you choose the two strategies? What are the results of the best alternative? What is your final decision?

See Example post.
After you have contemplated the questions above, draft your reflective essay. Every piece of writing should have an introduction, body, and conclusion. A good way to plan this particular reflective essay is to write an introduction to the essay. Next, write at least three body paragraphs and address each of the points listed above. End your essay with a conclusion paragraph tying all of your ideas together. The essay should be at least five paragraphs in length.
You are expected to use outside resources for this essay. Cite outside sources in proper APA format. You can find numerous APA resources in the Writing Center Writing Reference Library on the Research, Citation, and Plagiarism page.
Your essay should include a highly developed purpose and viewpoint; it should also be written in Standard American English and demonstrate exceptional content, organization, style, grammar, and mechanics. There should be no evidence of plagiarism. If you are unsure about what constitutes plagiarism, please review the plagiarism policy.
First response: Choose a classmate’s post and review the decision analysis table. Add to this table by choosing a risk level for each state of nature (assign a probability value to each).

Calculate the EMV for each alternative.
Discuss which alternative is best based on the best (maximum) EMV.
Calculate the Expected Value with Perfect Information (EVwPI).
Calculate the EVPI.
Discuss how much money your classmate should pay for perfect information.

See Example post.
Second response: Choose a classmate’s post and review the decision process. Further the math conversation by taking on the role of the business partner. Would you agree/disagree with the decision strategy? Are there any factors that have been overlooked that would affect the decision process? Would you choose the same two decision strategies under uncertainty?
See Example post.