Decision Theory:

For this discussion, you will compose a reflective essay to address the following scenario and questions:

Scenario: You are a business owner faced with an important decision that could potentially be very lucrative. Keep in mind the “Six Steps in Decision Making” as you set-up your decision analysis. See Example and DB starter video in the Unit 3 LiveBinder. Link: http://www.livebinders.com/play/play?id=2368062: Click on correct tabs for each step/information

1.   What is the problem and objective of this decision?

2.   Identify at least 3 alternatives and 3 states of nature.

3.   Create a decision table in Excel.

4.   Identify the potential payoff/losses for each alternative and state of nature and include in your decision table.

5.   Choose two decision strategies and determine the best alternative: (Clearly state the best alternative for each strategy.)

• Optimistic
• Pessimistic
• Criterion of Realism (Hurwicz)

6.   Why did you choose the two strategies? What are the results of the best alternative? What is your final decision?

After you have contemplated the questions above