MGOC10H3 Lecture Notes - Lecture 5: Sensitivity Analysis, Crystal Ball
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Ch 13 - decision making strategies: general decision making strategies. Maximin strategy: good for the pessimist or conservative decision maker, for each alternative/decision di, pick worst thing that can happen to you, choose the decision di that is best of the worst. 33: good for the optimist person , for each alternative/decision di, pick best thing that can happen to you, choose the decision di that is best of the best. 450: this strategy may not make sense in some cases. Laplace principle: assume each state equally likely to occur. Minimax regret: good for insecure decision maker. Try to minimize your max regret: need to construct regret matrix how bad do you feel afterwards if you make decision di and then state sj turns up. d3. 2: decision making with probabilities, choose decision with best expected value. The amounts shown are costs and not profits in this example. Calculate the expected value with perfect info for example 4.
