Decision Analysis Example Blackbeard Phantom’s Fireworks is considering introducing two new bottle rocket. The company can add both to the current line, neither or just one of the two. The success of the product depends on consumers’ reactions. The reactions can be summarised as good (30%), fair (50%) or poor (20%). The company’s revenue in thousands of dollars, are estimated in the following pay-off table.
Decision Probability Neither Product 1 only Product 2 only Both 1. 2. 3. 4. 5. 6.
30% 0 125 105 220
Payoffs table State of nature Fair 50% 0 65 60 110
Compute the decision based on maximin Compute the decision based on maximax Compute the expected monetary value Develop an opportunity loss (regret table) Compute the decision based on minimax regret Compute the expected opportunity loss (EOL)