COMMERCE 3QA3 Chapter 8: Chapter 8
3 Jun 2016
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List all possible decision alternatives: course of action that is available to the decision maker, no limit in # of decision alternatives. Identify the future outcomes for each decision alternative: outcomes aka. States of nature or uncertain events: decision maker has little to not control over outcome. Identify the payoff (profit or cost) for each combo of alternatives and outcomes: payoffs aka. Conditional values as the output depends on certain conditions to hold true (building certain sized factory: payoffs can be monetary or non-monetary (units sold, workers needed, etc. , construct a payoff or decision table to look at outcome possibilities. Select decision analysis modeling techniques and apply the decision model to make a decision. Decision making under certainty: decision maker knows for sure the payoff of every decision alternative, typically one outcome for each alternative, unrealistic in the real world, associated with all linear programming problems.
