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Home Work Assignment – Chapter 3
Show your decision process by drawing the
decision tree with calculated EMVs for all nodes.
(a) What decision would maximize expected profit?
Show your work.
(b) What is the maximum amount that should be
paid for a perfect forecast of the economy?
Show your work.
(a) Develop an opportunity loss table. The table
should include a column showing the
maximum loss for each alternative.
(b) What is the minimax regret decision?
(a) Develop an opportunity loss table. The table
should include a column showing the
maximum loss for each alternative.
(b) What is the minimax regret? What is the
minimax regret decision?
(a) What is the maximum expected profit? What
decision would maximize the expected profit?
Show your work.
(b) What is the maximum amount that should be
paid for a perfect forecast of the economy?
Show your work.