Section outline


    • Overview Page
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      In the process of optimization, we need make certain deicsions in our algorithms. Therefore,  the next topic of our module is decision analysis.   A decision problem is characterized by decision alternatives, states of nature, and resulting payoffs. The decision alternatives are the different possible strategies the decision maker can employ. • The states of nature refer to future events, not under the control of the decision maker, which may occur. States of nature should be defined so that they are mutually exclusive and collectively exhaustive.  The learning outcomes of htis topic is:

      To apply appropriate decision techniques (without or with probability) to find the best decision for a problem.


    • Decision Making File
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    • Discussion Forum
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      With reference to the exercise completed in class:

      A company is deciding whether to develop and launch a new product. Research and development costs are expected to be $400,000 and there is a 70% chance that the product will be successful. If it is successful, the expected revenue and the probability of each occurring have been estimated as follows, x, y, and z respectively depending on whether the product’s popularity is high, medium, or low.  Set a range of values for x,y, and z and analyze the consequence of its impact on the net profit for each possible scenario and action.