Quantitative analysis-Decision Making Assignment Help
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Question 1
Select one of the decision criteria (slide 3-11in the PowerPoint presentation) assuming hypothetical values for the pay-offs towards a decision .What is the criteria that will maximize the maximum payoff for every alternative .Please provide references.
Example.
-One day, I went to town to do some shopping and later I was left with some fixed amount of money in the pocket. All over sudden, the rain started pouring. I had to make a quick decision on whether to buy an umbrella or just board a bus. I decided to go home since buying the umbrella could cost me more money. I had confident that I will arrive home as soon as possible. Later, the bus took off and after a good distance of driving ,the driver realized that he could himself make more money with the situation ,so he decided to pack the bus at the roadside and shouted “end of journey, everyone out” He later made a U-turn and started ferrying passengers back to town. I was left walking and the shopping was wet and destroyed. The situation also caused cold flu which resulted to spending of extra money on hospital bill double the tragedy .I could have avoided this by just making otherwise decision.
•Criteria for this decision.
a)Saving time- I took decision to board the bus to save time but I didn’t take into consideration the consequences of taking the decision.
b)Saving money - I opted to go home instead of buying an umbrella which could have helped to avoid the destruction of the goods purchased .The caused spending of more money against my expectation.
a)Alternative 1- Includes the following estimations.
-Shopping cost-$500
-Transport cost-$100
-Hospital bill-$1000
-Cost of good destroyed-$500
Total expenditure= $ 2100
From this alternative, I used more money compared to alternative 2.More money and time spent in hospital and also the goods I purchased were destroyed.
b)Alternative 2- it includes the following estimations.
-Shopping cost- $500
-An umbrella cost-$450
-Transport cost-$50
Total expenditure= $ 1000
In this alternative I could have opted to buy an umbrella and wait the rain to stop drizzling .The could have reduced high cost spent in transportation and at the same time no goods could have been destroyed.
• Optimistic criterion (maxi-max criterion)
This method is used in finding alternative that maximizes the maximum payoff. The following are the cost estimation on both alternatives.
Alternative 2 is the Maxi-max. It’s the best of the best outcome. It’s the best decision to save more money and time.
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