Find range of probability by graphical sensitivity analysis

Assignment Help Basic Statistics

Reference no: EM13110302

The following payoff table shows profit for decision problem with two states of nature and two decision alternatives:

Decision Alternatives State of Nature
S1 S2
D1 10 1
D2 4 3

a. Use graphical sensitivity analysis to find out range of probabilities of state of nature S1 for which each of decision alternatives has largest expected value.

b. Assume P(S1) = 0.2 and P(S2) = 0.8. Determine the best decision using expected value approach?

c. Conduct sensitivity analysis on payoffs for decision alternative D1. Suppose probabilities are as given in part (b) and range of payoffs under states of nature S1 and S2 which will keep solution found in part (b) optimal. Is solution more sensitive to payoff under state of nature S1 or S2?

Reference no: EM13110302

Questions Cloud

Determine values of the slack and surplus variables : Determine the values of the slack and surplus variables and interpret them. Which constraints are binding constraints? Describe.

Derive equation of the consumers demand curve : Derive the equation of the consumer's demand curve for x and with y on the vertical axis and x on the horizontal axis, draw a price-consumptioncurve when the price of x changes.

Determining hypothesis testing of mexican migrants : A United Nations report shows the mean family income for Mexican migrants to the United States is $27,000 per year. A FLOC(Farm Labor Organizating Committee) evaluation of 25 Mexican family units reveals a mean to be $30,000 with a sample standard..

What do you suppose would happen to your muscles : Curare, a poison extracted from a South American shrub, blocks the binding of Ach by muscle cells. What do you suppose would happen to your muscles, including the ones involved in breathing, if a toxic dose of curare entered your bloodstream?

Find range of probability by graphical sensitivity analysis : Use graphical sensitivity analysis to find out range of probabilities of state of nature S1 for which each of decision alternatives has largest expected value.

Discuss purpose of strategic objectives : What are strategic objectives? What is the purpose of strategic objectives? What makes an effective strategic objective?

Explain why rigor mortis develops : For about the first 36 hours after a person dies, their skeletal muscles are in a rigid state called rigor mortis because myosin cross-bridges cannot detach from actin. Given what you have learned about muscle contraction physiology, can you expla..

Determining difference in variances : A sample of 25 concession stand purchases at the October 22 matinee of Bride of Chucky showed a mean purchase of $5.29 with a standard deviation of $2.78.

Describe the key planning factors for competitive success : What are the key planning factors for competitive success? Provide an example of an organization that has achieved competitive success through planning.

User Account

All Pages