Posted: February 19th, 2022

One of the many ways in decision analysis to solve for an optimal solution is through a State of Nature Decision Tree. Decision trees provide a graphical representation of the decision making process.

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**Please Answer Questions In Number Form**
One of the many ways in decision analysis to solve for an optimal solution is through a State of Nature Decision Tree.  Decision trees provide a graphical representation of the decision making process.  A decision tree will show a natural or logical progression that will occur over time.  Thus, the decision tree allows us to see the potential outcome of multiple alternative decisions that we can make for a particular problem or opportunity.
The decision tree is easily developed from a payoff table and one is provided to you below for this assignment.
The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Use the table to answer the assignment questions that are listed just below the table.
Decision Alternative
State of Nature
State of Nature
State of Nature
S1
S2
S3
d1
250
100
25
d2
100
100
75
Assignment Questions
Construct a decision tree for this problem.
If the decision maker knows nothing about the probabilities of the three states of nature, what is the recommended decision using optimistic, conservative, and minimax regret approaches?
What other applications, problems or opportunities could you use a decision tree to solve? Provide at least two examples with detail of how you would set up the decision trees.
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2016 ECPI
Rubric
Unit 4 Assignment 2
Unit 4 Assignment 2
Criteria
Ratings
Pts
This criterion is linked to a Learning OutcomeContent
All requirements of the assignment are met. Calculations are correct. Decision tree correctly developed. Approach for recommendation of optimistic, conservative or Minimax justified.
70 pts
Full Marks
0 pts
No Marks
70 pts
This criterion is linked to a Learning OutcomeJustification
Narrative content demonstrates sufficient elaboration and explanation of calculations.
20 pts
Full Marks
0 pts
No Marks
20 pts
This criterion is linked to a Learning OutcomeMechanics
File is organized and has a logical sequence
10 pts
Full Marks
0 pts
No Marks
10 pts
Total Points: 100

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