Probabilities for the state of nature in Exercise 3.8 are estimated as in Table EX 3.9
a. Draw a decision tree for the product line decision.
b. Using rollback procedure and EMV, what is the solution to product alternatives?
Exercise :
The payoff table (Table EX 3.8 ) shows alternatives for three new product line decisions: Gamma Knife, daVinci Heart Procedure, Prostate Seed Implants, and two states of nature for the demand for these products. Payoffs (revenue) are given in millions of dollars. The health care facility can afford to implement only one of the product lines in the near future.
a. What is the pessimistic strategy for the new product line?
b. What is the optimistic strategy for the new product line?
c. What would be the Laplace strategy for the new product line?
d. What is the minimax regret solution to this problem?
e. What is the solution for a Hurwitz optimism value of 0.6?