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    WS 3.6 Decision Analysis

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    Emely Gonzaga
    This document contains 6 quantitative decision analysis problems. Problem 1 involves selecting the best candidate for a job based on interview scores, experience, and references. Problem 2 asks which crop, corn or soybeans, a farmer should plant given probabilities of price increases, decreases, or staying the same for each crop. Problem 3 examines whether an author should accept a publishing contract or self-publish a novel based on predicted sales numbers and royalty rates.

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    WS 3.6 Decision Analysis

    Uploaded by

    Emely Gonzaga
    29 views2 pages
    This document contains 6 quantitative decision analysis problems. Problem 1 involves selecting the best candidate for a job based on interview scores, experience, and references. Problem 2 asks which crop, corn or soybeans, a farmer should plant given probabilities of price increases, decreases, or staying the same for each crop. Problem 3 examines whether an author should accept a publishing contract or self-publish a novel based on predicted sales numbers and royalty rates.

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    This document contains 6 quantitative decision analysis problems. Problem 1 involves selecting the best candidate for a job based on interview scores, experience, and references. Problem 2 asks which crop, corn or soybeans, a farmer should plant given probabilities of price increases, decreases, or staying the same for each crop. Problem 3 examines whether an author should accept a publishing contract or self-publish a novel based on predicted sales numbers and royalty rates.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    29 views2 pages

    WS 3.6 Decision Analysis

    Uploaded by

    Emely Gonzaga
    This document contains 6 quantitative decision analysis problems. Problem 1 involves selecting the best candidate for a job based on interview scores, experience, and references. Problem 2 asks which crop, corn or soybeans, a farmer should plant given probabilities of price increases, decreases, or staying the same for each crop. Problem 3 examines whether an author should accept a publishing contract or self-publish a novel based on predicted sales numbers and royalty rates.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    QUANTITATIVE METHODS IN MANAGEMENT

    WORKSHEET 3.6: DECISION ANALYSIS

    Members:

    1. The personnel department at C&H has narrowed the search for a prospective employee to 3 candidates:
    Steve, Jane and Maisa. The final selection is based on 3 criteria: personal interview, experience and
    references. The department uses matrix A as given to establish the preferences among the 3 criteria. After
    interviewing the 3 candidates and compiling the data regarding their experiences and references, the matrices
    AI, AE and AR are constructed. Which of the 3 candidates should be hired? Assess the inconsistency of the
    data.

    I E R S J M S J M S J M
    I 1 2 1
    4
    S 1 3 4 S 1 13 2 S 1 12 1
    A AI  AE  AR 
    E 12 1 1
    5
    J 1
    3
    1 15 J 3 1 12 J 2 1 12
    R 4 5 1 M 1
    4 5 1 M 1
    2 2 1 M 1 2 1

    2. Farmer McCoy can plant either corn or soybean. The probabilities that the next harvest prices of these
    commodities will go up, stay the same or go down are 0.25, 0.30 and 0.45, respectively. If the prices go up,
    the corn crop will net $30,000 and the soybean will net $10,000. If the prices remain unchanged, McCoy will
    barely breakeven. But if the prices go down, the corn and soybean crop will sustain losses of $35,000 and
    $5,000 respectively. Which crop should McCoy plant?

    3. You are the author of what promises to be a successful novel. You have the option to either publish the novel
    yourself or use a publisher. The publisher is offering you $20,000 for signing the contract. If the novel is
    successful, it will sell 200,000 copies. If it isn’t, it will sell only 10,000 copies. The publisher pays $1 royalty
    per copy. A market survey by the publisher indicates that there is a 70% chance that the novel will be
    successful. If, conversely, you publish the novel yourself, you will incur an initial cost of $90,000 for printing
    and marketing, but each copy sold will net you $2. Suppose that you contracted a literary agent to conduct a
    survey concerning the potential success of the novel. From past experience, the agent advises you that when
    a novel is successful, the survey will predict the wrong outcome 20% of the time. When the novel is not
    successful, the survey will give the correct prediction 85% of the time. Based on these, would you accept the
    publisher’s offer?

    Page 1 of 2
    QUANTITATIVE METHODS IN MANAGEMENT

    4. Hank is an intelligent student and usually makes good grades, provided that he has the chance to review the
    course material the night before the test. For tomorrow’s test, Hank is faced with a small problem. His
    fraternity brothers are having an all-night party in which he would like to participate. Hank has three options:
    a1) party all night; a2) divide the night equally between studying and partying; a3) study all night. The
    professor giving tomorrow’s exam is unpredictable, in the sense that the test can be easy (s1), moderate (s2)
    or tough (s3). Depending on the toughness of the test and the amount of review Hank does, the test score
    combinations found on the table can be anticipated. Recommend a course of action for Hank.

    5. Determine the saddle-point solution, the associated pure strategies and the value of the game for the
    following game. The payoffs are for player A.

    6. Two companies promote two competing products. Each product currently controls 50% of the market.
    Because of recent improvements in the two products, each company is preparing to launch an advertisement
    campaign. If neither company advertises equal market shares will continue. If either company launches a
    stronger campaign, the other is certain to lose a proportional percentage of its customers. A survey of the
    market shows that 50% of potential customers can be reached through television, 30% through newspapers
    and 20% through radio. Formulate the problem as a two-person zero-sum game and select the appropriate
    advertisement media for each of the companies.

    Page 2 of 2

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