2-1 2.1 Decision Analysis: Expected Value of Perfect Information (EVPI) The Expected Value of Perfect Information (EVPI) will be explained with the following example: Example: “Flip the Coin Game” Richard has to decide whether to play a game of “flip the coin” with Karin. The game is as follows: If the coin ends up heads Karin pays Richard one dollar and if the coin ends up tails Richard pays Karin eighty cents. What is the most Richard should pay a clairvoyant (look up this word if you do not
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| |6.1 |Decision Making Under Uncertainty -- maximax, maximin, |1 | | | |minimax regret and principle of insufficient reason criteria | | | |6.2 |Expected Value Criterion, EVPI |1 | | |6.3 |Decision Making Under Uncertainty -- Maximax
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Problem 1: Data-Based Decision Making Supermarket Product Placement Suppose that we are responsible for managing product placement within a local supermarket. Our shelving units have 6 shelves each and are numbered from 1 to 6—with 1 being the lowest shelf and proceeding upward until the highest shelf is assigned the number 6. While there are many placement options that we should consider, we decide to look for any correlations between the row a product is placed on and its sales. Since we have
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MAT 540 Week 2: Decision Analysis |Slide # |Topic |Narration | |1 |Introduction |Welcome to Quantitative Methods. In this lesson, we will discuss the concept of decision | | | |analysis, a valuable technique for decision making process. | | | |
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Exotic Adventure study Case Case Synopsis Exotic Adventure Inc must decide if continue with the planned itinerary or cancel the trip at some point. They information available to make a decision is not accurate enough and it could be compromised with the other parties interest. State the Assignment Question Should Exotic Adventure Inc select option one (cancel the trips) or option two (continue as originally planned and monitor the water levels)? Case Analysis The Exotic adventure
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Introduction What is involved in making a good decision? A good decision is one that is based on logic, considers all available data and possible alternatives, and the quantitative approach. Decision theory is an analytic and systematic approach to the study of decision making The Six Steps in Decision Making 1. Clearly define the problem at hand 2. List the possible alternatives 3. Identify the possible outcomes or states of nature 4. List the payoff or profit of each combination
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that the referendum for a zoning change will be approved and it also provided some estimated revenue and costs. He also suggested that the company should conduct a survey of voters because its likelihood of approval plays an important role in the decision process; and to develop probabilities that the zoning change is approved or not, based on the voters choice of accepting or rejecting it. II. Statement of the Problem Mr. Thomas Anderson
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huge profits while the biotech companies sell in other to get finances to proceed with other business ventures or to stay in business. In order for both parties to benefit, major decisions have to be made on the method of valuation. The method used has to be objective and valid. This case study is about LAB and its decision to license off Davanrik to Merck. This analysis is about how Merck has been able to generate substantial returns given the costly and lengthy time to develop drugs and the potential
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2.Decision Theory - Decision Tables and Decision Trees, Game Theory 2.1 Introduction and Basic Terms Decision theory represents a generalized approach to decision making. It enables the decision maker to analyze a set of complex situations with many alternatives and many different possible consequences to identify a course of action consistent with the basic economic and psychological desires of the decision maker Decision theory problems are characterized by the following: a decision criterion a
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describes Merck’s decision tree evaluation process. It also provides information to evaluate a specific licensing opportunity, including the costs of the three phases of the review process, the present value of the revenues associated with successful outcomes, and the probability of various outcomes. Questions 1. How has Merck been able to achieve substantial returns to capital given the large costs and lengthy time to develop drug? 2. Build a decision tree that shows the cash
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