Lecture 6 QA

Quantitative Analysis - Lc 6 14/07/2014
Decision Analysis
Method Ch 14 Audio 145
Everything for the midterm was Deterministic ( exact,

no variance, no probability ) in real life there is nothing
called deterministic.
There should be something Probabilistic ( there are
some probability values )
The probabilistic measurement is not that difficult as
long as the data is around with the probability values
The difficult part is to put the probability value ,
How to measure the probability value, while as the
tendency for risk is different from one to other
people ( they are not equal )?
It will be based on utilities, We will go to combine the
tendency of risk in a problem , in making a decision .
This topic is called Decision analysis ( 2 lectures ).
It is more into application of real life .
Decision analysis is very systematic, easy mechanism
steps, easy to got the full mark.
Decision Analysis can be applied in real life
1 Prof. Maged Morcos

Variance :
The variance is a measure of risk
Is a range , between 2 amounts
Ex1: Ex 2:
9:00 is the value we are after

When the range is wide , it will be a risky measure ,
therefore Ex 2, is better .
It is difficult to put the probability curve in making
decisions
We have different attitudes, values, and utilities, tendency
and directions
Ex: in the lottery the risk averse, will panic from the risk,
will decide to wait.
The entrepreneurs like the risk and cant live without it.
We are after to calculate it numerically, We will make
decision analysis using table and decision tree.

General Description
1.1 Definition:
Decision Analysis is an analytic and
systematic approach to studying of decision
making
2.1 Areas of Application in Real Life:

Decision analysis can be used in any
application of life.
It is used to determine optimal strategies
when a decision maker is faced with
several decision alternatives and an
uncertain or risk-filled pattern of future
events.

Problem Solving and

Decision-Making
Problem Solving can be defined
as:
The process of identifying a
difference between some actual and
some desired state of affairs and then
taking action to resolve the
difference.
Example : Waiting the exams result, if you dont like, that
is the deviation from what you like. Either (1) accept it or
(2) give more effort in order to be better , (3) if you will
leave it, so you are going to take a risk.
It is your decision based on the difference between the
actual and the desired
The Problem-solving process

involves the following eight
steps:
1. Define the Problem
2. Identify the Alternatives
3. Determine the Decision Criteria
4. Evaluate the Alternatives
5. Choose the Alternative
6. Implement the Decision
7. Evaluate the Results

8. Monitor the success or failure of
the chosen alternative

Define the Problem (it takes a long time)

1.
2. Identify the Alternatives (that you can

follow)
3. Determine the Decision Criteria
(Criteria is: the comparison between the
alternatives will be based on what, is it on cost or
on profit, risk , time, even on behavior , attitude, or
comfort)
We can combine all these things it is called multi
criteria decision making (this is the area of the
research)
Some alternatives are risk , other are (qualitative
Risky
like attitude or behavior and you put numerical
P =value
1.0 0forthem
P to1.0
change
P them
N/A into quantitative.
It shows the tendency of the person either risk
averse or risk taker, and you give momentum or
continuum of the three of them.
4. Evaluate the Alternatives( Not yet
decided ) ,
5. Choose the Alternative ( decided ) ,
6. Implement the Decision
7. Evaluate the Results ( Measure the
result , and memorize it)
8. Monitor the success or failure of
the chosen alternative( to have the
Uncertain
memory in the future, to solve the problem
properly You will reduce the problem from
happening by precaution )
Any decision maker , take the decision in 3 continuum

(places or atmosphere, environment )
6
Certain
Prof. Maged Morcos
The atmosphere of uncertainty , I cannot predict or weight.

If I am in an uncertain atmosphere I will work with the intuition, to be either:
Risk taker
Risk Averse
Risk Neutral
If there are 3 partners in an uncertain atmosphere, there
will be problem here, the solution is to get a value
The rule of the decision maker is to get away from the
uncertain atmosphere
CEO Should not put his people in the atmosphere of
uncertainty, in order that your decision will be within a
range of Risky
In the Risk science; The probability is (0 P 1.0 )
if it reach 1 it is Certain
The range will be from 0 to 1.
Then I can put different probabilities here and in this case, I
will be in a risk atmosphere, because I can put probabilities.
If I can put probabilities, so I am in an uncertain
atmosphere.
We have to solve the problem in both ways :
(a) I will imagine that I am in uncertain atmosphere ,
and we will solve the problem.
(b) I will do something to solve the problem to make it
Risky, to move nearer to the Certainty .

(c) If the company is in a Certainty atmosphere, no

problem ( which is difficult to happen.
We are struggling all the time to move from Uncertainty
to Certainty

3.1 Objective:
Decision making is used to identify, decision
in 3 cases:
1. Decision making under Certainty:
In this case the decision-maker tends to
maximize his return or minimize his cost so
s/he will choose the decision that satisfy such
criteria in a problem where s/he knows the
outcomes with certainty.
2. Decision making under Risk:
In this case the problem is probabilistic, i.e.
the decision-maker can estimate or anticipate
the probability of occurrence of the events
(outcome) that the decision maker cannot
control which is called states of nature (in
England you should have with you heavy
cloth, umbrella and shoes for ice, precautions
you take them just in case, because of the
weather) associated with each decision
alternative.
In this case the decision maker tends to
maximize his expected return minimize the
expected loss. In this method the expected
criterion is used.
3. Decision making under Uncertainty:

In this case the problem is uncertain, i.e.. the

decision-maker cannot estimate or anticipate
the probability of occurrence of the events
(outcome) with each decision alternative.
Three types of decision making are used:
- Optimistic [ Maximax ]
- Conservative (Pessimistic) [ Maximin ]
- Regret Method [ Minimax]

Problem
3 partners want to make a decision, and they have different
attitude toward risk,
Their risk cannot estimate or anticipate the probability of
occurrence of something, for the future event w (payment,
cost, profit ), how they are going to behave ?
Notes:
We will solve the problem., and the other problem.
The idea of the decision making is to change the
attitude in making the decision better next time.
It is good to share in a co., you cant decide on your
own.
We need to consult one another at least on the higher
level.
To make life easy for the company and for us
We will got the higher dividend either we took the good
or the wrong decision.
To do this, we will decide the following:
Decision-Making Procedure
There are two type of Decision-making processes:
1. Decision-making without Probabilities
This includes two types:
(a) Matrix Decision Trees or Payoff tables
1. Maximax Criterion: Optimistic
approach
2. Maximin Criterion: Pessimistic
approach

3. Minimax Criterion: Minimum

Regret method
(b) Decision Trees without probabilities
2. Decision-making with Probabilities
This includes:
Expected value approach
Decision Trees with probabilities
Problem Audio 145 28: 00
(a) Pay-Off Table

In decision theory, we refer to the outcome that result from a specific
decision alternative and the occurrence of a particular state of nature as a
payoff
A table showing payoffs for all combination of decision alternatives
and states of Nature is a payoff table as fo1lows:
State of Nature
High Market Low Market
Decision
acceptance acceptance
alternatives
S1 S2
d1 = Small
8 7
Complex
d2 = Medium
14 5
Complex
D3 = Large
20 -9
Complex
(b) Decision Trees

A decision tree provides a graphical representation of the decision-
making process
The decision tree can be drawn without probabilities or with
probabilities
The decision node is represented by the symbol

The state-of nature node is represented by the symbol

The decision-tree looks like as follows :

Notes:
3 decision makers want to build a mall, they thought
about the alternatives, after a feasibility study ...
They found that the first alternative d1, the 2 is
medium, and the third is large complex
A state of nature will happen : ( something that can
happen from this decision, either the market will accept
their mall or the market will be low acceptance, these
are things they do not know about it
They ask the feasibility study responsible to make
analysis, and they found that the data ( after calculating
the profit, revenue and cost ..... )
they discovered :
If they implement the Small Complex :
o will be 8m for the high acceptance
o and only 7m when the acceptance is
low
If they implement the Medium Complex :
o and only 5m when the acceptance is
low
If they implement the Large Complex :
o and only -9m when the acceptance is
low
- 9 means that they implement the large
complex and people didn't come , so they had
a loss of 9 (which happened in real life, it is
not appealing for the people, bad location,
)

The pay-off table could be internationally presented by

figure called The Decision tree ( It is noted in the
exam ).
The problem could be presented as follow :
(1). is a Decision Note ( Small Medium
Large )
(2). is a Chance Event ( High Low )
(3). Numbers 8 7 14 5 20 (-9)

(a) Decision Trees

High S1
8
d1 = Small
Low S2 7
High S1
14
d2 = Medium
Low S2
5
High S1
20
d3 = Larger
Low S2
-9
The chance event could happen for the 3 Note,
Which Decision you are going to make from the
tree??
I should give weights to each,
To solve it without weight, I will use the intuition
(1). who will take the smaller is risk averse
(2). who will choose the higher is Risk Taker, even
if he will lose too much
(b) Decision Table:
Conservati
Optimisti
State of ve or Min
c
Nature Pessimisti Regret
approach
c
Max Max Min
S1 S2 S1 S2
Max Min Max
D1 8 7

D2 14 5
D3 20 -9
The Maximization Approach

Step 1 : Intuition Decision without
probability
If I am going to take the Small Complex, & I am trying
to Maximize my return :
o For the Decision D1 , I will choose 8 because I
am Optimistic
am Optimistic
am Optimistic
o Comparing between the 3 alternative I will
choose the higher: 20
Conservati
Optimisti
State of ve or Min
c
approach
c
S Max Min
S2 Max Min S1 S2
1 Max Max
D1 8 7 8
D2 14 5 14
2
D3 -9
0 20

Step 2 :
If I am going to take the Medium Complex, & I am
trying to Maximize the minimum of my return :
am Pessimistic
am Pessimistic
o For the Decision D1 , I will choose - 9 because I
am Pessimistic
o Comparing between the 3 alternative I will
choose the higher: 7
Conservati
Optimisti
State of ve or Min
c
approach
c
Max Min
S1 S2 Max Min S1 S2
Max Max
D1 8 7 8
7
D2 14 5 14 5
D3 20 -9 -9
20
D3 D1

Managerial Logic:
If I will discover that I receive many clients, I begin to
regret why I didnt choose the big Mall not the small
one .
Here comes the regret Method

Step 2 :
We have to change the problem from Maximization
to minimization , because my opportunity cost has been
changed
Same as the assignment problem

Will take the big amount from each column of Ss
S Max Max Min
S2 S1 S2
1 Max Min Max
D1 8 7 8 7 20 7
D2 14 5 14 5 20 7
2
D3 -9 2 -9 20 7
0
0
D3 D1
Will deduct it from the amount in the amount in the row

S Max Max Min
S2 S1 S2
1 Max Min Max
20 8 = 77
D1 8 7 8 7 12 = 0
20 14 = 75
D2 14 5 14 5
6 = 2
2 20 20 = 7 (- 9) =
D3 -9 2 -9
0 0 16
0
D3 D1
These are the bad thing that can happen in the problem

If I made the Decision no:3 of 20 , the market is

accepting , so I am getting 20m, and I am loosing ( 0 )
If I built D2 ( 20 ) , and I should have built Decision no:2
(14m) , the difference will be ( 6m )

That is Why I will get out the maximum regret in each

row from S1 & S2
Max Max Min

S1 S2 S1 S2
Max Min Max
20 8 = 77
D1 8 7 8 12
7 12 = 0
20 14 = 75
D2 14 5 14 5
6 = 2 6
20 20 = 7 (- 9) =
D3 2 -9 -9 16
2 0 16
0
D3 D1 D2
Then I take the Minimum of the bad regret
( the minimum of the maximum of the values that I
regret ) .
Managerial Logic:
If 3 partners are in this business, and they want to make
a decision :
o one will go for D1
o the other will go for D3
o and the third will go for D2
IF we have 2 amounts are the same

(in other prob):
S Max Max
S2 S1 S2 Min Max
1 Max Min
D1
D2 6
D3 6

D2 ,
D3
The decision will be either D2 OR D3 ( doesnt
matter , we didnt put weights yet because it is
qualitative decision, based on my intuition )

Step 3 :
S Max Max Min
S2 S1 S2
1 Max Min Max
20 8 = 77
D1 8 7 8 7 12
12 = 0
20 14 = 75
D2 14 5 14 5 6
6 = 2
2 20 20 = 7 (- 9) =
D3 -9 2 -9 16
0 0 16
0
D3 D1 D2
- There are 3 decisions now, which one to be chosen
- We should put weights for the S1 & S2 upon Market
survey.
- Making an Elicitation of Probability
- If Probability of S1 = 0.8 & for S2 = 0.2 , and they
accept on this weight :
P 0. 0.
= 8 2
S Max Max Min
S2 S1 S2
1 Max Min Max
20 8 = 77
D1 8 7 8 7 12
12 = 0
20 14 = 75
D2 14 5 14 5 6
6 = 2
2 20 20 = 7 (- 9) =
D3 -9 2 -9 16
0 0 16
0
D3 D1 D2

- We will give a lower and a higher range for

weighting (Ceiling and flooring) :

Step 3 :
Expected Values without perfect

information :
E ( D1 )
8 X 0.8 + 7 X 0.2 = 7.8
=
E ( D2 )
14 X 0.8 + 5 X 0.2 = 12.2
=
$
E ( D3 ) -
=
20 X 0.8 +
9
X 0.2 = 14.
2
- Expected Value without perfect information
- Expected value should be between the 2 values 7.8 s
between 7 & 8.
- The expected value means that every one gives me
different solution.
Managerial Decision :
- If 3 partners are in this business, and they want to
make a decision :
- If we want to maximize our profit, we will choose
( D3 )
- The Risk science get me out of the uncertain

science to know how take a decision with the help
of the probability value.
- I should proof that in the real life it is : 0.8 & 0.2

- What you will gain is 20 or ( -9 ), You will not gain 14.2, it
is an averaging
EVWPI = 14.2

Decision :
The decision is D3 and the value that I am going to
get is 14.2
High S1
8
d1 = Small E ( D1 ) = 8 X 0.8 + 7 X 0.2 = 7.8
Low S2 7
High S1
14
d2 = Medium E ( D2 ) = 14 X 0.8 + 5 X 0.2 = 12.2
Low S2
5
High S1
20
d3 = Larger
E ( D3 ) = 20 X 0.8 + - 9 X 0.2 = 14.
Low S2
-9

Step 4 :
Expected Values with perfect
information
- Is the highest no in S1 and the highest number in

S2
P= 0.8 0.2
S1 S2
D1 8 7
D2 14 5
D3 20 -9
- Why ? , because these are the best result can happen

- Multiplied by 0.8 & 0.2
- Add them together
$
EVPI 2 0.
0
X 0.8 + 7 X
2
= 17.
=
4
- This problem has a Maximum ceiling in its Expected
value
- If we have 7 instead of 9 , it will be perfect .

- A consultant will turn this -9 into 7 , and will ask for

money
- I can pay his fees from the difference between

- The Expected Value should be :

With Without
$ $ $
EV = =
17.4 14.2 3.2
Managerial Decision :
- If the consultant you are hiring to improve the situation
of the data will get $ 4000 , would you pay him or not
- Why? , because he cant give you more than the $ 17.4 , ,
which you know it from the problem
-
EV = $ 3.2
Is the Premium that you are going to pay if you want
a perfect information

The Minimization Approach

- If it is minimization problem, I should target the lowest
value.
- Lowest of S1 = 8 , S 2 = - 9
Decision :
The decision is D1 and the value that I am going to
get is 7.8
High S1
8
d1 = Small
E ( D1 ) = 8 X 0.8 + 7 X 0.2 = 7.8
Low S2 7
High S1
14
d2 = Medium E ( D2 ) = 14 X 0.8 + 5 X 0.2 = 12.2
Low S2
5
High S1
20
d3 = Larger
E ( D3 ) = 20 X 0.8 + - 9 X 0.2 = 14.
Low S2
-9
Expected Value With Probability is: 7.8

Step 1 :
Expected Values with perfect
information
- Is the highest no in S1 and the highest number in

S2
P= 0.8 0.2
S1 S2
D1 8 7
D2 14 5
D3 20 -
- Why ? , because these are
9
the lowest cost which can
happen
- Multiplied by 0.8 & 0.2
- Add them together
EVPI - 0. $
8 X 0.8 + X =
= 9 2 4.6
Expected Value Without Probability is: 4.6
- The Expected Value should be :
With Without
EVPI = $ $ 4.6 = $
7.8 3.2
-

- Expected Value with Perfect information means, It will

reduce the cost or will increase the profit.
- Expected Values
If you have probability use
without perfect information : 7.8
- Expected
If you dont have probability you will use :
Values with perfect information : 4.6
- They are 4 different Methods, 3 for the intuition, the 4 th
when you have probability .
- If the problem starts in life with the probability you dont

have to go with intuition
- If you have the probability , you dont need to do the

others
- If you didnt get the probability, you need to start for the
probability, then to solve the problem.
- when the market is uncertain, and you dont have the
probability, you will work with your own intuition (the
table Method), either risk take averse or risk taker or in
between.

The Minimization of the previous

problem
- This problem is minimization, , my target is the minimum
cost
will will will
change change change
from from from
Max Max Mix Min
Max to to
to Min Max
Min Min Max Min
P 0. 0.
= 8 2
S Min Max
S2 Min Min S1 S2
1 Max Min
8 8 8= (- 9) 7 =
D1 7 8 7 16
0 16
14 8 = (- 9) 5 =
D2 14 5 14 5 14
6 14
2 20 8 = (- 9) (- 9)
D3 -9 20 -
0 12 =0 -
D3 D1 D3
12
- (- 9) means a bank or loan will pay it instead of me
- If it is conservative , I will take the minimum of the
maximum , choice will be D1
- If we will take the maximum, the decision will be ( 12 )
D3

- IE: one choose D1 , and 2 choose D3
EVWPI = ( 12 )

The Sensitivity
- Who said it is 0.8 & 0.2 ?
- If we decided it is 0.7 & 0.3, the decision will remain
D3 in the maximization
- This is the sensitivity.
- I will move the probability , the decision will change
- As a decision maker , I need the chances or the
probabilities every day, like the stock market.
- Here the decision maker weight the value of the
probability in the problem
- And then the probability plays , and then the
sensitivity shows which decision I am going to do
- This problem will come in the exam in

case of there is S1 & S2 only .
- If there is S1 , S2 & S3 , there will be
no sensitivity
- P (Probaility)
P ( S1 ) = P P ( S2 )
=1P
- If : P (S1) = 0.8 P ( S2) = 0.2 , 0.7 &
0.3
- Lets put these values in form of probability :

Expected Values of Decision # 1

EV D1 = 8P + 7 ( 1P)
= 8P + 7 7P
= P+ 7

EV D1= 14 P + 5 ( 1P)
= 14 P + 5 5P =
9P+5

EV D1 = 20 P + ( 9 ) ( 1 P )
= 20 P + ( 9 ) + 9 P =
29 P 9
- If I will put P = 0.8 , I will have all the previous values

we did in the problem .
- Means what is the profit depending on each
probability
- Here is the sensitivity : when the P changes , the
result will change
- That is why each morning I will ask about he value f
the P

- The decision depends on the information from the

newspaper.
- The p changes from 0 to 1
- We will satisfy the p as follow

P=1, P=0


EV D1 = 8 P + 7 ( 1P)
= 8P + 7 7P = P+
7
IF P = 0 Profit = 7 (0,7)
IF P = 1 Profit = 8 (1,8)
20 - 20 -
19 - 19 -
18 - 18 -
17 - 17 -
16 - 16 -
15 - 15 -
14 - 14 -
13 - 13 -
12 - 12 -
11 - 11 -
10 - 10 -
9- 9- D1 =
D1 = 8- 8- (1,8)
(0,
7) 7- 7-
6- 6-
5- 5-
4- 4-
3- 3-
2- 2-
1- 1-
0
P=0 -1- P=1
-2-
-3-
-4-
-5-
-6-
-7-
-8-

-9-

EV D1= 14 P + 5 ( 1P)
= 14 P + 5 5P =
9P+5
IF P = 0 Profit = 5 (0,5)
IF P = 1 Profit = 14 (1,
14 )
20 - 20 -
19 - 19 -
18 - 18 -
17 - 17 -
16 - 16 -
15 - 15 - D2 =
( 1 , 14
14 - 14 - )
13 - 13 -
12 - 12 -
11 - 11 -
10 - 10 -
9- 9-
D12:
8- 8- 1,8
D1:
0,7 7- 7-
6- 6-
D2 = 5- 5-
(0,
5) 4- 4-
3- 3-
2- 2-

1- 1-
0
P=0 -1- P=1
-2-
-3-
-4-
-5-
-6-
-7-
-8-
-9-

EV D1 = 20 P + ( 9 ) ( 1 P )
= 20 P + ( 9 ) + 9 P =
29 P 9
IF P = 0 Profit = ( 9 ) (0,5
)
IF P = 1 Profit = 20 (1,
20 )
20 - 20 - D3 =
( 1 , 20
19 - 19 - )
18 - 18 -
17 - 17 -
16 - 16 -
15 - 15 -
D2: 1 ,
14 - 14 - 14
13 - 13 -
12 - 12 -
11 - 11 -

10 - 10 -
9- 9-
D12:
8- 8- 1,8
D1:
0,7 7- 7-
6- 6-
5- 5-
D2:
0,5 4- 4-
3- 3-
2- 2-
1- 1-
0
P=0 -1- P=1
-2-
-3-
-4-
-5-
-6-
-7-
D3 = -8-
(0,-
9) -9-
- In case of Maximization:
- If the problem is maximization, I will look to all the
highest values , till I found the intersection
- The line in red shows that its resuls is better than
what it is below it.
D3: 1 ,
20 - 20 - 20

19 - 19 -
18 - 18 -
17 - 17 -
16 - 16 -
15 - 15 -
D2: 1 ,
14 - 14 - 14
13 - 13 -
12 - 12 -
11 - 11 -
10 - 10 -
9- 9-
D12:
8- 8- 1,8
D1:
0,7 7- 7-
6- 6-
5- 5-
D2:
0,5 4- 4-
3- 3-
2- 2-
1- 1-
0
P=0 -1- P=1
-2-
-3-
-4-
-5-
-6-
-7-
-8-
D3: 0,
-9 -9-
- I will measure the intersection

20 - 20 - D3: 1 ,

20
19 - 19 -
18 - 18 -
17 - 17 -
16 - D3 16 -
15 - 15 -
D2: 1 ,
14 - 14 - 14
13 - 13 -
12 - 12 -
11 - 11 -
10 - D2 10 -
9- 9-
D12:
D1
8- 8- 1,8
D1:
0,7 7- 7-
6- 6-
5- 5-
D2:
0,5 4- 4-
3- 3-
2- 2-
1- 1-
0
P=0 -1- P=1
-2-
-3-
-4-
-5-
-6-
-7-
-8-
D3: 0,
-9 -9-
0.25 0.7
Conclusion:

If the probability of S1 is between 0 & 0.25 I go for

Decision # 1
If the probability of S1 is between 0.25 & 0.7 I go for
Decision # 2
If the probability of S1 is between more than 0.7 I go
for Decision # 3

In case of Maximization:
If the probability is 0.56 ???
I will take the Decision # 2



- The important question fort eh marketing and
feasibility study responsible is :
- What is the probability today

In case of Minimization:
- I will look to all the lowest values , till I found the
intersection
20 - 20 - D3 =
D3: 1 ,
19 - 19 - 20
18 - 18 -
17 - 17 -
16 - 16 -
15 - 15 -
D2: 1 ,
14 - 14 - 14
13 - 13 -
12 - 12 -
11 - 11 -
10 - 10 -
9- 9-
D12:
8- 8- 1,8
D1:
0,7 7- 7-
6- D1 6-
5- 5-
D2:
0,5 4- 4-
3- 3-
2- 2-
1- 1-
0
P=0 -1- P=1
D
-2- 3
-3-
-4-
-5-
-6-
-7-
-8-

D3: 0,
-9 -9-
0.6
- Here we have D3 & D1 , there is no D2
- Because the values of ( 14 , 5 ) is bad for the cost .
- Because the probability of 0.8, 0.2 killed the decision #
2
- Not always the middle decision is the best one

Lecture 6 QA

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Lecture 6 QA

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Quantitative Analysis - Lc 6 14/07/2014

Everything for the midterm was Deterministic ( exact,

Decision Analysis can be applied in real life

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Is a range , between 2 amounts

9:00 is the value we are after

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2.1 Areas of Application in Real Life:

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Problem Solving and

The Problem-solving process

7. Evaluate the Results

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Define the Problem (it takes a long time)

2. Identify the Alternatives (that you can

Any decision maker , take the decision in 3 continuum

The atmosphere of uncertainty , I cannot predict or weight.

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(c) If the company is in a Certainty atmosphere, no

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In this case the problem is uncertain, i.e.. the

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3. Minimax Criterion: Minimum

(a) Pay-Off Table

(b) Decision Trees

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The state-of nature node is represented by the symbol

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The pay-off table could be internationally presented by

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(a) Decision Trees

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The Maximization Approach

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Same as the assignment problem

Will deduct it from the amount in the amount in the row

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If I made the Decision no:3 of 20 , the market is

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That is Why I will get out the maximum regret in each

Max Max Min

IF we have 2 amounts are the same

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- We will give a lower and a higher range for

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Expected Values without perfect

- The Risk science get me out of the uncertain

- I should proof that in the real life it is : 0.8 & 0.2

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- Is the highest no in S1 and the highest number in

- Why ? , because these are the best result can happen

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- A consultant will turn this -9 into 7 , and will ask for

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- The Expected Value should be :