Statistics Chapter 17

1. the choices available, or alternatives 2. the states of nature, which are not under the control of the decision maker 3. the payoffs

1. The goals of the decider 2. The steps to reach the goal 3. The risks invovled

1. The total list of options 2. The option with the best return 3. Selecting the best option

Uncertainty regarding future demand. State of nature (future demand) unknown. Decision maker has no control over state of nature.

Two or more courses of action open to decision maker. Decision maker must evaluate alternatives. Decision maker selects a course of action based on certain criteria. Depending on the set of circumstances, these criteria may be quantitative, psychological, sociological, and so on.

Profit. Break even. Loss.

Uncertainty regarding future demand. State of nature (future demand) unknown. Decision maker has no control over state of nature.

Two or more courses of action open to decision maker. Decision maker must evaluate alternatives. Decision maker selects a course of action based on certain criteria. Depending on the set of circumstances, these criteria may be quantitative, psychological, sociological, and so on.

Profit. Break even. Loss.

Profit. Break even. Loss.

Two or more courses of action open to decision maker. Decision maker must evaluate alternatives. Decision maker selects a course of action based on certain criteria. Depending on the set of circumstances, these criteria may be quantitative, psychological, sociological, and so on.

Uncertainty regarding future demand. State of nature (future demand) unknown. Decision maker has no control over state of nature.

refers to the expected monetary value of decision alternative, i. There may be many decisions possible. We will let 1 stand for the first decision, 2 for the second, and so on. The lower- case letter i represents the entire set of decisions.

refers to the probability of the states of nature. There can be an unlimited number, so we will let j represent this possible outcome.

refers to the value of the payoffs. Note that each payoff is the result of a combination of a decision alternative and a state of nature.

refers to the probability of the states of nature. There can be an unlimited number, so we will let j represent this possible outcome.

refers to the value of the payoffs. Note that each payoff is the result of a combination of a decision alternative and a state of nature.

refers to the expected monetary value of decision alternative, i. There may be many decisions possible. We will let 1 stand for the first decision, 2 for the second, and so on. The lower- case letter i represents the entire set of decisions.

refers to the value of the payoffs. Note that each payoff is the result of a combination of a decision alternative and a state of nature.

refers to the probability of the states of nature. There can be an unlimited number, so we will let j represent this possible outcome.

refers to the expected monetary value of decision alternative, i. There may be many decisions possible. We will let 1 stand for the first decision, 2 for the second, and so on. The lower- case letter i represents the entire set of decisions.

opportunity loss or regret

opportunity gains

best decision method

opportunity decision regret

The difference between the optimal decision and any other decision made.

The difference between the opportunity loss and the optimal decision made.

The difference between the opportunity loss and any other decision made

The difference between the optimal and the least optimal decisions.

refers to the expected opportunity loss for a particular decision alternative.

refers to the probability associated with the states of nature, j.

refers to the regret or loss for a particular combination of a state of nature and a decision alternative.

refers to the expected opportunity loss for a particular decision alternative.

refers to the probability associated with the states of nature, j.

refers to the regret or loss for a particular combination of a state of nature and a decision alternative.

refers to the expected opportunity loss for a particular decision alternative.

refers to the probability associated with the states of nature, j.

refers to the regret or loss for a particular combination of a state of nature and a decision alternative.

Always lead to the same decision concerning which course of action to follow.

Always lead to the opposite decision concerning which course of action to follow.

Usually lead to a similar decision concerning which course of action to follow.

Always lead to a different decision concerning which course of action to follow.

The strategy that maximizes the minimum gain

The strategy that maximizes the maximum gain

The strategy that minimizes the maximum regret

The strategy that maximizes the minimum gain

The strategy that maximizes the maximum gain

The strategy that minimizes the maximum regret

The strategy that maximizes the minimum gain

The strategy that maximizes the maximum gain

The strategy that minimizes the maximum regret

The difference between the maximum payoff under conditions of certainty and the maximum payoff under uncertainty.

The difference between the minimum payoff under conditions of uncertainty and the minimum payoff under certainty.

Very valuable information

Statistical data with a zero degree of error.

lets you see how accurate the probability estimates must be to feel comfortable with your choice.

Analysis how sensitive the data is to inclimate weather or acts of god.

Is the first step in the decision process.

Compares objections being voiced with history of experiences.

Present a picture of the various courses of action and the possible states of nature.

Are long term plans to continually make the best decisions over time.

Is a method of growing the accuracy of a choice with more data.

Is an alphabetical list of all decisions options.

Is a strategy to find the best decision in a decision tree.

Is a common mistake made by statisticians.

Is a decision tree constructed backwards.

Is the process of making a decision and verifying it afterwards.

The acts or alternatives

The decisions

The probabilities

The Consequences

The acts or alternatives

The decisions

The states of Nature

The payoff table

The payoff

The states of nature

The Probabilities

The acts or alternatives

The states of nature

The acts or alternatives

The payoff

The decision

A payoff table

The states of nature

The acts or alternatives

The probabilities