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¶ … decision analysis have three common elements. The first one is the set of strategies or decisions available to the decision maker. The second is the set of conceivable results as well as the probabilities of such results. The third is a value model prescribing outcomes, frequently monetary values, for the numerous combinations of outcomes and decisions. After knowing such elements, an "optimal" decision can be found and made by the decision maker.
An example of this would be a company. For the sake of the example the name of the company is Orlock Inc. Now Orlock has two simply methods, which are submit a bid and do not submit a bid. In the case of Orlock submitting a bid to acquire a contract, they have to decide how much. Orlock has to not only find out how much to bid, but also how much it will cost them supply the instruments. The data the company gathers suggest to submit a bid no greater than a certain amount. For example no more than $25,000 and no less than $18,000. Next would be to look at the behavior of the competitors and quantity of competitors.
By understanding a bidding behavior, there are more chances of the company submitting a successful bid. By figuring out the value model that helps transform outcomes and decisions into monetary value, the company enters the last...
The true value model for this example would be $0 if they placed an immediate bid considering the all the information. By listing any monetary outcomes within a payoff table, decisions become easier to manage thanks to represented visual data. Simplification of payoff tables may help in understanding the root or essence of the issue (YouTube, 2016). This is how a company can make decisions that will enable less cost and higher value.
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Expected Monetary Value or EMV is helpful is certain scenarios. Using a personal example to explain this term, imagine someone placing a bid on a house. There are two households wishing to place a bid on the house over asking price. The household wanting to place the bid that stays within their budget and by bidding higher than asking price, they may go well over their budget. Now if the household decides to not place a bid, there's no loss or gain.
Their budget is $115,000. The asking price is $105,000. If they go into a bidding war, they could go as high as $150,000 or so the realtor says since the houses adjacent have sold for that price. The asking price bid is the smallest competitive bid they can make. However, this bid presents as the smallest potential gain as well as loss because they gain back $10,000, but…
References
Cameron, I., Raman, R., & Raman, R. (2014). Process Systems Risk Management. San Diego: Elsevier Science.
YouTube,. (2016). PUAD630 Lecture 3 DecisionTrees Video. Retrieved 12 February 2016, from https://www.youtube.com/watch?v=pxPv3XxaJZc&feature=youtu.be
In the case of Kava island issue, we shall reach the decision in the following manner. White Hat / Hat #1: This is where a person needs to consider all the available data on the issue at hand. For example we know that Kava is a land of richness. It is a place with multiple possibilities because it has a sizeable young population, is rich in petroleum, coffee, sugar and other
The dominant, goal-oriented person can focus on the ultimate objective, the influence-based person can examine the interpersonal dynamics of the decisions that must be made, the steady person can foster harmony and a positive atmosphere, and the conscientious person can stay on task in a reliable fashion. While clashing personalities can thwart reaching positive and goal-directed solutions, they can create a better solution and check the excesses of one
Decision making tool. Forced Field Analysis: a decision making tool In business applications, health care, or private life there arise many occasions when one is faced with making a major decision. Although many individuals face such instances with their wits alone, relying on his or her "gut feelings" to assist them in their quandary, many find that such an unscientific approach can lead them to the wrong action. Indeed, when one lacks
Decision Making As the owner of a small grocery store, it has come to my attention that current business has been slow, and therefore, requires me to let go two employees of my total staff of four. By cutting my staff by half, this means that I would take on extra hours, as would another employee that I feel can handle the work-load, and can be trusted in taking on the
Decision Making at Chesapeake Energy Corporation Chesapeake Energy Corporation is founded by Aubrey K. McClendon and Tom L. Ward with an initial $50,000 investment. Chesapeake completed its IPO at a split-adjusted price of $1.33 per share that valued the Company at $70 million and reduced McClendon's and Ward's common stock ownership position to just under 60% from 100%. Chesapeake drilled a major deep gas discovery at Navasota River in the deep portion of
Decision making is a term that can be described as the process of choosing between alternatives and entails identification, development, and selection. Based on academic literature decision making and analysis can be widely divided into two schools of thoughts i.e. analytic and experiential or incremental decision making processes (Sipp & Carayannis, 2013, p.18). The analytic school of thought on decision making and analysis primarily focuses on problem definition and identification,