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Making decisions under certainty, uncertainty, and risk
Different methods can be used for approaching and solving decision problems. These methods depend on the amount of uncertainty associated with the parameters of the decisions and the likelihoods of the outcomes.
In this week’s Assignment, you will solve business decision problems presented in the “Chapter 5 Supplement” in your Resources. The problems under consideration this week are framed in terms of money and the impact on the bottom line, as opposed to determining the utility of alternatives. These problems range from making decisions in which information about the parameters of the problem are known with certainty, unknown, or determined probabilistically. Specific techniques for solving these decision problems under these conditions are discussed. Before you begin, watch the video “Managerial Decisions,” which provides an introduction to this Assignment.
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Solve problems 1, 6, 7, 9, and 12 on pp. 231–234 of the Stevenson text. Be sure to provide your rationale and explanations for your solutions.
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