Thompson Lumber (Dec Making Under Risk)
PAYOFFS
Alternatives
Large plant
Small plant
No plant
Probability
High demand
200000
90000
0
0,3
Outcomes
Moderate demand
100000
50000
0
0,5
Low demand
-120000
-20000
0
0,2
Best outcome
=MAX(B5:B7)
=MAX(C5:C7)
=MAX(D5:D7)
Expected Value WITH Perfect Information (EVwPI) =
Best Expected Monetary Value (EMV) =
Expected Value OF Perfect Information (EVPI) =
REGRET
Alternatives
Large plant
Small plant
No plant
Probability
High demand
=MAX(B$5:B$7)-B5
=MAX(B$5:B$7)-B6
=MAX(B$5:B$7)-B7
0,3
Outcomes
Moderate demand
=MAX(C$5:C$7)-C5
=MAX(C$5:C$7)-C6
=MAX(C$5:C$7)-C7
0,5
Low demand
=MAX(D$5:D$7)-D5
=MAX(D$5:D$7)-D6
=MAX(D$5:D$7)-D7
0,2
Maximize EMV
EMV
Choice
=SUMPRODUCT(B5:D5;B$8:D$8)
=IF(E5=MAX(E$5:E$7);”Best”;””)
=SUMPRODUCT(B6:D6;B$8:D$8)
=IF(E6=MAX(E$5:E$7);”Best”;””)
=SUMPRODUCT(B7:D7;B$8:D$8)
=IF(E7=MAX(E$5:E$7);”Best”;””)
=SUMPRODUCT(B10:D10;B8:D8)
=MAX(E5:E7)
=F12-F13
Minimize EOL
EOL
=SUMPRODUCT(B18:D18;B$21:D$21)
=SUMPRODUCT(B19:D19;B$21:D$21)
=SUMPRODUCT(B20:D20;B$21:D$21)
Choice
=IF(E18=MIN(E$18:E$20);”Best”;””)
=IF(E19=MIN(E$18:E$20);”Best”;””)
=IF(E20=MIN(E$18:E$20);”Best”;””)
Decision Making Under Risk
Enter all information in yellow. Results given in green.
PAYOFFS
Alternatives
Outcomes
Maximize EMV
EMV
Choice
$0 Best
$0 Best
$0 Best
Probability
Best outcome
$0
$0
$0
Expected Value WITH Perfect Information (EVwPI) =
Best Expected Monetary Value (EMV) =
Expected Value OF Perfect Information (EVPI) =
REGRET
Alternatives
Probability
Outcomes
$0
$0
$0
Minimize EOL
EOL
Choice
$0 Best
$0 Best
$0 Best
Thompson Lumber (Dec Making Under Uncertainty)
PAYOFFS
Alternatives
Large plant
Small plant
No plant
High demand
200000
90000
0
Outcomes
Moderate demand
100000
50000
0
Low demand
-120000
-20000
0
PAYOFFS
Alternatives
Large plant
Small plant
No plant
Good market
200000
90000
0
Outcomes
Fair market
100000
50000
0
Poor market
-120000
-20000
0
REGRET
Alternatives
Large plant
Small plant
No plant
High demand
=MAX(B$5:B$7)-B5
=MAX(B$5:B$7)-B6
=MAX(B$5:B$7)-B7
Outcomes
Moderate demand
=MAX(C$5:C$7)-C5
=MAX(C$5:C$7)-C6
=MAX(C$5:C$7)-C7
Low demand
=MAX(D$5:D$7)-D5
=MAX(D$5:D$7)-D6
=MAX(D$5:D$7)-D7
Maximax
Max payoff
=MAX(B5:D5)
=MAX(B6:D6)
=MAX(B7:D7)
Choice
=IF(E5=MAX(E$5:E$7),”Best”,””)
=IF(E6=MAX(E$5:E$7),”Best”,””)
=IF(E7=MAX(E$5:E$7),”Best”,””)
Hurwicz
Realism payoff
=F$14*MAX(B11:D11)+(1-F$14)*MIN(B11:D11)
=F$14*MAX(B12:D12)+(1-F$14)*MIN(B12:D12)
=F$14*MAX(B13:D13)+(1-F$14)*MIN(B13:D13)
a=
Choice
=IF(E11=MAX(E$11:E$13),”Best”,””)
=IF(E12=MAX(E$11:E$13),”Best”,””)
=IF(E13=MAX(E$11:E$13),”Best”,””)
0.45
Minimax
Max regret
=MAX(B18:D18)
=MAX(B19:D19)
=MAX(B20:D20)
Choice
=IF(E18=MIN(E$18:E$20),”Best”,””)
=IF(E19=MIN(E$18:E$20),”Best”,””)
=IF(E20=MIN(E$18:E$20),”Best”,””)
Maximin
Min payoff
=MIN(B5:D5)
=MIN(B6:D6)
=MIN(B7:D7)
Choice
=IF(G5=MAX(G$5:G$7),”Best”,””)
=IF(G6=MAX(G$5:G$7),”Best”,””)
=IF(G7=MAX(G$5:G$7),”Best”,””)
Equally likely
Average payoff
=AVERAGE(B11:D11)
=AVERAGE(B12:D12)
=AVERAGE(B13:D13)
Choice
=IF(G11=MAX(G$11:G$13),”Best”,””)
=IF(G12=MAX(G$11:G$13),”Best”,””)
=IF(G13=MAX(G$11:G$13),”Best”,””)
Decision Making Under Uncertainty
Enter all information in yellow. Answers will be in green area.
PAYOFFS
Alternatives
Outcomes
Maximax
Maximin
Max payoff Choice Min payoff Choice
$0 Best
$0 Best
$0 Best
$0 Best
$0 Best
$0 Best
PAYOFFS
Outcomes
Hurwicz
Realism
payoff
Choice
$0 Best
$0 Best
$0 Best
a=
Outcomes
Minimax
Max regret Choice
$0
$0 Best
$0
$0 Best
$0
$0 Best
Alternatives
REGRET
Alternatives
$0
$0
$0
$0
$0
$0
Equally likely
Average
payoff
Choice
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
Decision Making Under Uncertainty
PAYOFFS
Alternatives
Outcomes
Maximax
Maximin
Max payoff Choice Min payoff Choice
$0 Best
$0 Best
$0 Best
$0 Best
$0 Best
$0 Best
PAYOFFS
Outcomes
Hurwicz
Realism
payoff
Choice
$0 Best
$0 Best
$0 Best
a=
Outcomes
Minimax
Max regret Choice
$0
$0 Best
$0
$0 Best
$0
$0 Best
Alternatives
REGRET
Alternatives
$0
$0
$0
$0
$0
$0
Equally likely
Average
payoff
Choice
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
#DIV/0! #DIV/0!
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