lI The Decision Situation: An E: xample The decision alternatives are The operator does not lease the snow-making machine The operator does lease the snow-making machine The states of nature are The winter is mild The winter is typical The winter is severe o 2002 The Wadsworth Group
The Decision Situation: An Example • The decision alternatives are: – The operator does not lease the snow-making machine. – The operator does lease the snow-making machine. • The states of nature are: – The winter is mild. – The winter is typical. – The winter is severe. © 2002 The Wadsworth Group
Ⅷ The Payoff Table State State 2 State 3 (P=p)(P=p2)(P=p3) Decision 12 13 Alternative 1 Decision 21 Alternative 2 Decision 32 33 alternative 3 where vi is the payoff value associated with the selecting Alternative i and having State j occur, and pi is the probability that State occurs o 2002 The Wadsworth Group
The Payoff Table where vij is the payoff value associated with the selecting Alternative i and having State j occur, and pj is the probability that State j occurs. State 1 (P = p1 ) State 2 (P = p2 ) State 3 (P = p3 ) Decision Alternative 1 v11 v12 v13 Decision Alternative 2 v21 v22 v23 Decision Alternative 3 v31 v32 v33 © 2002 The Wadsworth Group