Decision Analysis

For following questions, use the following payoff matrix data to create a sensitivity analysis data table that summarizes the expected monetary value for each possible alternative relative to the probability of the state of nature that occurs favoring Alternative A being varied from 0.0 to 1.0 in increments of 0.01. Payoff Matrix Alternatives State of Nature 1 (Favors A) State of Nature 2 (Favors B) A $105.0 ($5.0) B ($25.0) $55.0 A and B $80.0 $50.0 Neither A nor B $0.0 $0.0 9. For what range of probability of the state of nature that favors alternative A occurring is selecting alternative A the optimal decision? 10. For what range of probability of the state of nature that favors alternative A occurring is selecting alternative B the optimal decision? 11. For what range of probability of the state of nature that favors alternative A occurring is selecting both alternatives A and B the optimal decision?

 

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