Transcription of DECISION ANALYSIS Chapter 4
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DECISION ANALYSIS Chapter 4
DECISION FORMULATIONI nfluence DiagramsPayoff TablesDecision MAKING WITHOUT PROBABILITIESO ptimistic ApproachConservative ApproachMinimax Regret MAKING WITH PROBABILITIESE xpected Value of Perfect ANALYSIS AND SENSITIVITY ANALYSISRisk AnalysisSensitivity ANALYSIS WITH SAMPLE INFORMATIONAn Influence DiagramA DECISION TreeDecision StrategyRisk ProfileExpected Value of Sample InformationEfficiency of Sample BRANCH PROBABILITIESD ecision ANALYSIS can be used to determine an optimal strategy when a de-cision maker is faced with several DECISION alternatives and an uncertain orrisk-filled pattern of future events. For example, a global manufacturermight be interested in determining the best location for a new plant. Sup-pose that the manufacturer has identified five DECISION alternatives corre-sponding to five plant locations in different countries.
PDC plans to price the individual condominium units between $300,000 and $1,400,000. PDC has preliminary architectural drawings for three different-sized projects: one with 30 condominiums, one with 60 condominiums, and one with 90 condominiums. The fi-nancial success of the project depends upon the size of the condominium complex and the
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