Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Example of certainty in decision making

25/03/2021 Client: saad24vbs Deadline: 3 days

Decision Theory LEARNING OBJECTIVES SUPPLEMENT OUTLINE 5S.5 Decision Making under Uncertainty, 219 After completing this supplement, you 5S.6 Decision Making under Risk, 220 5S.1 Introduction, 216 should be able to: 5S.7 Decision Trees, 2215S.2 The Decision Process and Causes of L05S.1 Outline the steps in the decision Poor Decisions, 217 5S.8 Expected Value of Perfect

process. Information, 2235S.3 Decision Environments, 218 L05S.2 Name some causes of poor 5S.9 Sensitivity Analysis, 224

decisions. 5S.4 Decision Making under Certainty, 218

L05S.3 Describe and use techniques that apply to decision making under uncertainty.

L05S.4 Describe and use the expected- value approach.

L05S.5 Construct a decision tree and use it to analyze a problem.

L05S.6 Compute the expected value of perfect information.

L05S.7 Conduct sensitivity analysis on a simple decision problem.

55.1 INTRODUCTION -

Decision theory represents a general approach to decision making. It is suitable for a wide range of operations management decisions. Among them are capacity planning, product and service design, equipment selection, and location planning. Decisions that lend themselves to a decision theory approach tend to be characterized by the following elements:

1. A set of possible future conditions that will have a bearing on the results of the decision.

2. A list of alternatives for the manager to choose from.

3. A known payoff for each alternative under each possible future condition.

To use this approach, a decision maker would employ this process:

1. Identify the possible future conditions (e.g., demand will be low, medium, or high; the competitor will or will not introduce a new product). These are called states of nature.

2. Develop a list of possible alternatives, one of which may be to do nothing. t

3. Determine or estimate the payoff associated with each alternative for every possible future condition.

---- ----------------------------------------~--

216

217 Supplement to Chapter Five Decision Theory

If possible, estimate the likelihood of each possible future condition.

5. Evaluate alternatives according to some decision criterion (e.g., maximize expected profit), and select the best alternative.

The information for a decision is often summarized in a payoff table, which shows the expected payoffs for each alternative under the various possible states of nature. These tables are helpful in choosing among alternatives because they facilitate comparison of alternatives. Consider the following payoff table, which illustrates a capacity planning problem.

POSSIBLE FUTURE DEMAND

Alternatives Low Moderate High Small facility $10* $10 $10 Medium facility 7 12 12 Large facil ity (4) 2 16 'Present value in $ millions.

The payoffs are shown in the body of the table. In this instance, the payoffs are in terms of present values, which represent equivalent current dollar values of expected future income less costs. This is a convenient measure because it places all alternatives on a comparable basis. If a small facility is built, the payoff will be the same for all three possible states of nature. For a medium facility, low demand will have a present value of $7 million, whereas both moderate and high demand will have present values of $12 million. A large facility will have a loss of $4 million if demand is low, a present value of $2 million if demand is moder- ate, and a present value of $16 million if demand is high.

The problem for the decision maker is to select one of the alternatives, taking the present value into account.

Evaluation of the alternatives differs according to the degree of certainty associated with the possible future conditions.

5S.2 THE DECISION PROCESS AND CAUSES OF POOR DECISIONS

Despite the best efforts of a manager, a decision occasionally turns out poorly due to unfore- seeable circumstances. Luckily, such occurrences are not common. Often, failures can be traced to a combination of mistakes in the decision process, to bounded rationality, or to suboptimization.

The decision process consists of these steps:

1. Identify the problem.

2. Specify objectives and criteria for a solution.

3. Develop suitable alternatives.

4. Analyze and compare alternatives.

5. Select the best alternative.

6. Implement the solution.

7. Monitor to see that desired result is achieved.

In many cases, managers fail to appreciate the importance of each step in the decision- making process. They may skip a step or not devote enough effort to completing it before jumping to the next step. Sometimes this happens owing to a manager's style of making quick decisions or a failure to recognize the consequences of a poor decision. The manager's ego can be a factor. This sometimes happens when the manager has experienced a series of successes- important decisions that turned out right. Some managers then get the impression that they can do no wrong. But they soon run into trouble, which is usually enough to bring them back down

Payoff table Table showing the expected payoffs for each alternative in every possible state of nature.

L05S.1 Outline the steps in the decision process.

L05S.2 Name some causes of poor decisions.

••

218

Bounded rationality The limitations on decision making caused by costs, human abilities, time, technology, and availability of information.

Suboptimization The result of different departments each attempting to reach a solu- tion that is optimum for that department.

Certainty Environment in which relevant parameters have known values.

Risk Environment in which cer- tain future events have probable outcomes.

Uncertainty Environment in which it is impossible to assess the likelihood of various future events.

EXAMPLE 55-1

Supplement to Chapter Five Decision Theory

to earth. Other managers seem oblivious to negative results and continue the process they associate with their previous successes, not recognizing that some of that success may have been due more to luck than to any special abilities of their own. A part of the problem may be the manager's unwillingness. to admit a mistake. Yet other managers demonstrate an inability to make a decision; they stall long past the time when the decision should have been rendered .

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Math Specialist
ECFX Market
Ideas & Innovations
Engineering Solutions
Quick Mentor
Calculation Guru
Writer Writer Name Offer Chat
Math Specialist

ONLINE

Math Specialist

I will cover all the points which you have mentioned in your project details.

$47 Chat With Writer
ECFX Market

ONLINE

ECFX Market

Hello, I an ranked top 10 freelancers in academic and contents writing. I can write and updated your personal statement with great quality and free of plagiarism

$30 Chat With Writer
Ideas & Innovations

ONLINE

Ideas & Innovations

I have read and understood all your initial requirements, and I am very professional in this task.

$45 Chat With Writer
Engineering Solutions

ONLINE

Engineering Solutions

I am known as Unrivaled Quality, Written to Standard, providing Plagiarism-free woork, and Always on Time

$51 Chat With Writer
Quick Mentor

ONLINE

Quick Mentor

I have read your project details. I can do this within your deadline.

$22 Chat With Writer
Calculation Guru

ONLINE

Calculation Guru

I will cover all the points which you have mentioned in your project details.

$47 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Cost optimal parallel algorithm - Single transferable vote advantages - What is simple staining used for - I want to become a soldier essay - How google search engine works ppt - How to calculate gpa in python - 1650 words, on Bill Andrews, the medical illustrator - Brightest glow stick color - Remar review dvd download free - Grand banks census 1945 - Which one of the following statements best describes group behavior - 2 3 assignment write a class it 145 - Basic principles of ultrasound - Due in two hours - Seeing the light by olive senior - Analyzing financial performance reports - Emotional objectivity - Advocacy Through Legislation - 2 - STATS 2023 - Teksystems timecard - Technical English 2 - What is ethical issue intensity - 9 pm military time - What is doctor faustus about - Pick a topic from data - In order to study the photochemical decay of aqueous bromine - User Requirements - Synthesis of tin ii iodide - Case 6 national collegiate athletic association ethics and compliance program - Rssl qp training cost - Discussion - According to piaget accommodation occurs when individuals - Explanatory and response variables - 4 discussion - Essentials of business law 8th edition pdf - Bsc subjects part 1 - Rochester concrete products prices - Homeostasis negative feedback worksheet - Ueda akinari tales of moonlight and rain pdf - Case Study - Facing east from indian country sparknotes - The 7c's of effective communication - Ivy lee contributions to public relations - Examples of creative activities in health and social care - Due aug 27 - Disks of polycarbonate plastic from a supplier are analyzed - Checking d4d injector values - Strategic IT Plan - Distance vs time graph slope - Newspaper articles with descriptive statistics - Static and kinetic friction lab report answers - Finite fields in cryptography and network security - Trends & issues in executive management for health care administrators - Www southamptonvts co uk - Compute the revised annual depreciation - What is a pdp - Middlesex county college application deadline - Health care delivery in the united states 11th edition ebook - Game development project proposal - Go to the website: https://epic.org/privacy/litigation/ which focuses on civil rights issues and privacy. Pick a case. - Visual communication in the media rasmussen - In the hall of the mountain king art - M22759 wire color code - ESSAY - Blp oil spray system - Mrs van daan fur coat - WEEK 3 Discussion Prompt 1 PHARMACOLOGY - Expository writing graphic organizer - Snhu acc 202 final project presentation - Market share simulation - Great clips shoppes at peachers mill - Alfred adler individual psychology - What is the equity multiplier for - Cutoff frequency of transistor - Nursing - Baxter video products sales are expected - Walker and avant concept analysis 2014 - Face time vs screen time the technological impact on communication - Articulate the PR-Asian Ideologies (Plagiarism Checked) Submit Assignment - Haydn cello concerto in c 1st movement - Capital in the Twenty-First Century (200 words or more) - Dead poets society shmoop - A 70 kg base runner begins his slide into second base when he is moving at a speed of 4.0 m/s - Coca cola company mission vision and values - Assignment 3 government - Symbols of holy orders - Ap physics 1 review packet - Keperra quarry development brookfield - Adversarial Collaboration - Calculating kinetic energy worksheet - Data Analytics - 682 478 5655 - Cisco ise wildcard certificate - Discussion 4 - Food cost percentage meaning - What does carson mean by the obligation to endure - Mean Making Forum 2 - Emf series and galvanic series - Key concepts in mathematics