What are some of the different criteria that the choice decision between alternatives is influenced by?
The choice decision between alternatives is influenced by many different criteria such as the manager’s perspective on events, the policies of the business and the optimistic or pessimistic approaches of decision maker.
In cases where there is no level of information or knowledge about the outcomes of events, how is the decision given?
In cases where there is no level of information or knowledge about the outcomes of events, decision is given under uncertainty. If there is more than one event in decision problem, any information about the events or the probability of occurrence of these events is not known by decision maker, it is decided under uncertainty.
In decision making under uncertainty, why may decision-makers choose different methods?
In decision making under uncertainty, the psychological status of the decision maker and their attitude and approach towards the events affect the decision. Therefore, decision makers may choose different methods. In this case, different decision makers can make different decisions about the same decision problem.
For firms launching a new product, an important change in marketing strategy or opening first branch can be given examples of decision making under uncertainty. What could these decisions be influenced by?
These decisions could be influenced by such factors as the reaction of competitors, changes in customer demand, technological changes, economic shifts, government regulations and the situations beyond the control of decision makers.
What are some of the examples of decision making under uncertainty for firms launching a new product?
For firms launching a new product, an important change in marketing strategy or opening first branch can be given examples of decision making under uncertainty.
What factors affect the decision in decision making under uncertainty?
In decision making under uncertainty, the psychological status of the decision maker and their attitude and approach towards the events affect the decision.
There are some different methods used in decision making under uncertainty. What is the rank order between these methods?
There are some different methods used in decision making under uncertainty. There is no rank or superiority among these methods.
Generally, how many different methods can be used for decision making under uncertainty?
Generally, five different methods can be used for decision making under uncertainty.
What does 'Equally Likely' method indicate?
This method indicates that all events occur equally likely if the probability of occurrence of events is unknown. Therefore, calculation is made considering that the event’s possibility occur equally. The final decision is made according to the objective (maximum or minimum) of the problem.
In 'Equally likely' method, what is considered when calculation is made?
Calculation is made considering that the event’s possibility occur equally.
When can 'Criterion of Optimism' method be used?
If decision maker has an optimistic approach, this method can be used.
In Criterion of Optimism method, if the problem is the minimization, what is the best outcome?
If the problem is the minimization, the best outcome is the lowest value. In this case, the alternative which is the smallest value is chosen.
When can 'Criterion of Pessimism' method be used?
If decision maker has a pessimistic approach, this method can be used.
In 'Criterion of Pessimism' method, what does the decision maker think about the outcomes of the alternatives?
The decision maker thinks that the worst outcomes for each alternative will be realized. However, when choosing from alternatives, it selects the best alternative for the objective of the problem.
In 'Criterion of Pessimism' method, what is the worst outcome if the problem is minimization?
If the problem is minimization, the worst outcome is the highest value.
Which method allows the decision maker to use both optimistic and pessimistic approaches together?
Criterion of Realism allows the decision maker to use these two approaches together.
In 'Criterion of Realism' method, there is a coefficient indicating the level of optimism of the decision maker. What is this coefficient symbolized by?
There is a coefficient indicating the level of optimism of the decision maker. This coefficient is symbolized by alpha (α).
What is 'Minimax Regret' method based on?
This method is based on opportunity loss, also called regret. It is defined as the difference between the optimal and the actual pay-off.
How did 'Minimax Regret' method propose that maximum regret be minimized?
This method proposed that maximum regret be minimized by choosing the best pay off for each event.
In 'Minimax Regret' method, when is the maximum opportunity loss (regret) for each alternative located?
After the regret matrix has been constructed, the maximum opportunity loss (regret) for each alternative is located.