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MN-2549: DECISION ANALYSIS

MAY/JUNE 2019

Answer TWO Questions ONLY

Question 1

(a)       Describe the structure and content of a decision matrix. [20%]

(b)        Explain, with the aid of simple example for each method, how a decision matrix

can be solved using the following methods:

(i)     Maximin (Wald) criterion [20%]

(ii)    Minimax Regret (Savage) criterion [20%]

(iii)   Maximax criterion [20%]

(iv)   Laplace criterion (Principle of insufficient reason) [20%]

Question 2

(b)        What relevance do these paradoxes have in decision making in business? [20%]

Question 3

Discuss the influence that opinion and judgment have on the decision making process of individuals in organizations. What are the possible effects of these factors? Make specific references, using examples, to the sources of bias in making decisions. [100%]

Question 4

(a)       Discuss,  with  an  example,  the  idea  that  the  cost  of  obtaining  perfect information may be more than it is worth. [50%]

(b)        Discuss,  with  appropriate  examples,  the  methods  by  which  risk  can  be accounted for in decision making. [50%]