Transcription of DECISION ANALYSIS Chapter 4 - Cengage Learning
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DECISION ANALYSIS Chapter 4 - Cengage Learning
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.
Chapter 4 Decision Analysis 99 State of Nature Decision Alternative Strong Demand s 1 Weak Demand s 2 Small complex, d 1 87 Medium complex, d 2 14 5 Large complex, d 3 20 9 TABLE 4.1 PAYOFF TABLE FOR THE PDC CONDOMINIUM PROJECT
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