3. Use the decision profit table given here to complete parts (a) through (d). S

Question

3. Use the decision profit table given here to complete parts (a) through (d).

States of Nature

S1

S2

Decision

D1

- 10

10

Alternatives

D2

- 50

50

D3

- 100

100

a) Use the maximax criterion to determine which decision alternative to select.

b) Use the maximin criterion to determine which decision alternative to select.

c) Use the Hurwicz criterion to determine which decision alternative to select. Let = 0.5.

d) Compute an opportunity loss table from these data. Use this table and a minimax regret criterion to determine which decision alternative to select.

S1

S2

Decision

D1

- 10

10

Alternatives

D2

- 50

50

D3

- 100

100

Explanation / Answer

Ans:

a)

Maximum of respective maximums is100,so choose D3.

b)

Maximum of respective minimums is -10,so choose D1.

c)

Weighted average is 0 for all alternatives.,so all are equally likely to be selected.

d)

D1 has minimum opptortuinity loss,so,choose D1.

S1 S2 maximum D1 -10 10 10 D2 -50 50 50 D3 -100 100 100

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