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    85 5.2823529 Expected Value

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    akashkr619
    The next document contains probability distributions and expected losses for different actions under various states of nature. It determines that taking action for a state of nature of 55000 units should be chosen as it has the lowest expected loss. The following shows calculations of expected losses for different capacity levels and recommends releasing all 3 seats now for

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    85 5.2823529 Expected Value

    Uploaded by

    akashkr619
    224 views9 pages
    The next document contains probability distributions and expected losses for different actions under various states of nature. It determines that taking action for a state of nature of 55000 units should be chosen as it has the lowest expected loss. The following shows calculations of expected losses for different capacity levels and recommends releasing all 3 seats now for

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    The next document contains probability distributions and expected losses for different actions under various states of nature. It determines that taking action for a state of nature of 55000 units should be chosen as it has the lowest expected loss. The following shows calculations of expected losses for different capacity levels and recommends releasing all 3 seats now for

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    224 views9 pages

    85 5.2823529 Expected Value

    Uploaded by

    akashkr619
    The next document contains probability distributions and expected losses for different actions under various states of nature. It determines that taking action for a state of nature of 55000 units should be chosen as it has the lowest expected loss. The following shows calculations of expected losses for different capacity levels and recommends releasing all 3 seats now for

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 9

    Outcome Frequency

    x f p(x) x.p(x)
    2 24 0.2823529 0.5647059
    4 22 0.2588235 1.0352941
    6 16 0.1882353 1.1294118
    8 12 0.1411765 1.1294118
    10 7 0.0823529 0.8235294
    12 3 0.0352941 0.4235294
    15 1 0.0117647 0.1764706
    85 5.2823529 EXPECTED VALUE
    x p(x) x.p(x)
    8000 0.05 400
    9000 0.15 1350
    10000 0.25 2500
    11000 0.3 3300
    12000 0.2 2400
    13000 0.05 650
    1 10600 EXPECTED VALUE
    x p(x) x.p(x)
    0 0.35 0
    50 0.25 12.5
    100 0.15 15
    150 0.1 15
    200 0.08 16
    250 0.05 12.5
    300 0.02 6
    1 77

    SO JIM SHOULDN'T PAY $100 FOR MAINTENANCE


    No. of Accidents Frequency
    x f p(x) x.p(x)
    0 1 0.0416667 0
    2 1 0.0416667 0.0833333
    3 1 0.0416667 0.125
    4 2 0.0833333 0.3333333
    6 1 0.0416667 0.25
    7 3 0.125 0.875
    8 5 0.2083333 1.6666667
    9 2 0.0833333 0.75
    10 5 0.2083333 2.0833333
    12 2 0.0833333 1
    14 1 0.0416667 0.5833333
    24 7.75
    MR OPSINE SHOULD RECOMMEND AN INSTALLATION
    TRUCK DIVISION AIRLINE DIVISION
    LETTERS LOST FREQUENCY LETTERS LOST FREQUENCY
    x f p(x) x.p(x) x f p(x)
    0 1 0.0833333 0 0 2 0.1666667
    1 2 0.1666667 0.1666667 1 1 0.0833333
    2 2 0.1666667 0.3333333 2 2 0.1666667
    3 2 0.1666667 0.5 3 1 0.0833333
    4 2 0.1666667 0.6666667 4 3 0.25
    5 2 0.1666667 0.8333333 5 1 0.0833333
    6 0 0 0 6 1 0.0833333
    7 1 0.0833333 0.5833333 7 1 0.0833333
    12 3.0833333 12

    HE SHOULD INVESTIGATE AIRPLANE DIVISION.


    x.p(x)
    0
    0.0833333
    0.3333333
    0.25
    1
    0.4166667
    0.5
    0.5833333
    3.1666667
    BUILDING A LOSS MATRIX

    STATES OF NATURE
    25000 40000 55000 70000
    PROBABILITY 0.1 0.3 0.45 0.15
    ACTION CP 0.25
    25000 0 15000 30000 45000 SP 1.25
    40000 3750 0 15000 30000 OVERSTOCK 0.25
    55000 7500 3750 0 15000 UNDERSTOCK 1
    70000 11250 7500 3750 0

    E[LOSS] FOR 25000 E[LOSS] FOR 40000 E[LOSS] FOR 55000


    x p(x) x.p(x) x p(x) x.p(x) x
    0 0.1 0 3750 0.1 375 7500
    15000 0.3 4500 0 0.3 0 3750
    30000 0.45 13500 15000 0.45 6750 0
    45000 0.15 6750 30000 0.15 4500 15000
    24750 11625

    SO 55000 SHOULD BE CHOOSEN


    E[LOSS] FOR 55000 E[LOSS] FOR 70000
    p(x) x.p(x) x p(x) x.p(x)
    0.1 750 11250 0.1 1125
    0.3 1125 7500 0.3 2250
    0.45 0 3750 0.45 1687.5
    0.15 2250 0 0.15 0
    4125 5062.5
    1 Revenue generated by releasing all 3 seats now
    750

    2 Expected net revenue if all 3 seats are released now


    = 250*3 - 0.45*0 - 0.30*1*150 - 0.15*2*150 - 0.10*3*150
    = 615

    3 Expected net revenue if 2 seats are released now


    =

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