Flashcards
Business Analytics: Lecture 7.
Cards in this deck (13)
- 1What are the three decision making challenges?Uncertainty
Risk
Conflicting objectives. - 2How do you work out Maximax Optimistic Approach?-You maximize the maximum.
Which means you select the highest (best) payoff of the best state of nature. - 3How do you work out Maximin Approach?1. You find out the lowest payoff of each state of nature.
2. & then you select the highest of the lowest payoff.
(Maximize the minimum) - 4How do you work out minimum regret approach?1. You calculate the regret of each.
Regret = Highest payoff - Payoff received.
2. You write the values in a regret table.
3. You find the highest of each payoff.
4. You choose the lowest of the highest payoff. - 5What are the three optimistic decision making techniques called?-Maximax approach,
-Maximin approach,
-Minimum regret approach. - 6What is a decision making problem?When an individual has to choose the best possible option, from selected alternatives.
- 7What is the difference between uncertainty and risk?An uncertainty is when you cannot estimate an outcome of a decision, due to the lack of information.
So you are aware about the possible events, but not the probabilities.
& a risk is when the decision maker is aware of the possibilities of an event occurrence. - 8What is a decision problem?is characterized by a decision alternatives and state of nature.
- 9What is a decision alternative? (choice)A decision a person can make in a particular situation.
- 10What is a chance event?A uncertain future event in which the occurrence of it happening is not in the control of the decision maker.
- 11What is a state of nature?A possible outcome.
- 12What is a payoff?A consequence from a combination of the state of nature & the decision alternative. e.g. time, cost, profits etc.
- 138 decision making steps1. Identification of the problem
2. Specifying the objectives and decision criteria.
3. Identification of the alternatives.
4. Analysis of alternatives.
5. Selection of the best alternatives.
6. Sensitivity analysis.
7. Implementation of the chosen alternatives.
8. Controlling and monitoring the results.
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- Flashcards on Business Analytics: Lecture 7., created by xManisha12 . on 10/04/2017.
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- xManisha12 .
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