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Assignment 1

The document analyzes different criteria for making a decision about how many newspapers to order: 1) The maximin, Hurwicz, and expected value criteria recommend ordering 7 newspapers, while the minimax regret criterion recommends 7 or 8 newspapers. 2) The maximax criterion recommends ordering 9 newspapers, and the expected opportunity loss criterion also recommends 7 newspapers. 3) The maximum modal payoff criterion also recommends ordering 7 newspapers, as that option has the highest probability of occurring (state 7).

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Cesar Orlando Quiroz Villavicencio
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24 views

Assignment 1

The document analyzes different criteria for making a decision about how many newspapers to order: 1) The maximin, Hurwicz, and expected value criteria recommend ordering 7 newspapers, while the minimax regret criterion recommends 7 or 8 newspapers. 2) The maximax criterion recommends ordering 9 newspapers, and the expected opportunity loss criterion also recommends 7 newspapers. 3) The maximum modal payoff criterion also recommends ordering 7 newspapers, as that option has the highest probability of occurring (state 7).

Uploaded by

Cesar Orlando Quiroz Villavicencio
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ASSIGNMENT 1

MASTA: SPACE PROJETC MANAGEMENT


FULL NAME: CESAR ORLANDO QUIROZ VILLAVICENCIO
For the newspaper order problem of example 6 please make decision using various criteria.

 Maximin criteria
 Minimax regret criteria
 Maximax criterion
 Hurwiez criterion (α=0.5)
 Expected value criterion
 Expected opportunity loss (EOL) criterion
 Maximun modal payoff criterion

Suppose you have a record of newspaper sale for 200 days.

Sales 5 6 7 8 9
days 20 40 80 30 30
Prob. 20/200=0.1 40/200=0.2 8/200=0.4 30/200=0.15 30/200=0.15
estimates
You pays the company 20 cents for each paper and sells the paper for 50 cents.

Maximin criterion

Newspaper Newspaper sales


Reward
ordered 5 6 7 8 9
5 150 150 150 150 150 150 maximin
6 130 180 180 180 180 130
7 110 160 210 210 210 110
8 90 140 190 240 240 90
9 70 120 107 220 270 70
The maximin criterion recommends ordering 6 newspapers.

Minimax regret criteria

Newspaper Newspaper sales


ordered 5 6 7 8 9
5 150-150=0 180-150=30 210-150=60 240-150=90 270-150=120
6 150-130=20 180-180=0 210-180=30 240-180=60 270-180=90
7 150-110=40 180-160=20 210-210=0 240-210=30 270-210=60
8 150-90=60 180-140=40 210-190=20 240-240=0 270-240=30
9 150-70=80 180-120=60 210-170=40 240-220=20 270-270=0
The minimax regret criterion recommends ordering 7 or 8 newspapers.

Maximax criterion

Newspapers State yielding best Best outcome


ordered outcome
5 5,6,7,8,9 150
6 6,7,8,9 180
7 7,8,9 210
8 8,9 240
9 9 270
The maximax criterion would recommend ordering 9 newspapers, this yields a profit of 270 cents.

Hurwicz criterion (α=0.5)

Newspapers
Hurwiez criterion Reward
ordered
5 150(0.5)+150(1-0.5) 150
6 130(0.5)+180(1-0.5) 155
7 110(0.5)+210(1-0.5) 160
8 90(0.5)+240(1-0.5) 165
9 70(0.5)+270(1-0.5) 170
The Hurwics criterion would recommend ordering 9 newspapers, this yields a profit of 270 cents.

Expected value criterion

Newspaper Newspaper sales


Reward
ordered 5 (0.1) 6 (0.2) 7 (0.4) 8 (0.15) 9 (0.15)
5 150 150 150 150 150 150
6 130 180 180 180 180 175
7 110 160 210 210 210 190 recommend
8 90 140 190 240 240 185
9 70 120 170 220 270 172.5
The expected value criterion recommend ordering 7 newspapers

Expected opportunity loss (EOL) criterion

Newspaper Newspaper sales


Reward
ordered 5 (0.1) 6 (0.2) 7 (0.4) 8 (0.15) 9 (0.15)
5 0 30 60 90 120 61.5
6 20 0 30 60 90 36.5
7 40 20 0 30 60 21.5 recommend
8 60 40 20 0 30 26.5
9 80 60 40 20 0 39
The opportunity loss (EOL) criterion recommend ordering 7 newspapers

Maximun modal payoff criterion

Newspaper Newspaper sales


ordered 5 (0.1) 6 (0.2) 7 (0.4) 8 (0.15) 9 (0.15)
5 150 150 150 150 150
6 130 180 180 180 180
7 110 160 210 210 210
8 90 140 190 240 240
9 70 120 170 220 270
The modal state is 7 newspapers

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