Assignment:
Decision Analysis
(You must complete this question in Excel)
The director of career advising at Orange Community College wants to use decision analysis to provide information to help students decide which 2-year degree program they should pursue. The director has set up the following payoff table for six of the most popular and successful degree programs at OCC that shows the estimated 5-year gross income ($) from each degree for four future economic conditions:
Degree Program Economic Conditions
Recession Average Good Robust
Graphic Design 145,000 175,000 220,000 260,000
Nursing 150,000 180,000 205,000 215,000
Real Estate 115,000 165,000 220,000 320,000
Medical Tech 130,000 180,000 210,000 280,000
Culinary Tech 115,000 145,000 235,000 305,000
Computer IT 125,000 150,000 190,000 250,000
Probability 0.2 0.4 0.3 0.1
Determine the best degree program in terms of projected income, using the following decision criteria:
a. Maximax
b. Maximin
c. Equal likelihood
d. Hurwicz (alpha = .6)
e. Minimax regret
f. EOL (expected opportunity loss)
g. The director of career advising at Orange Community College has paid a small fee to a local investment firm to indicate a probability for each future economic condition over the next 5 years, which is shown in the last row of the above table. Using expected value determine the best degree program in terms of projected income.
h. Determine the EVPI of this problem.