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Institution Affiliation:

Student Name:

Assignment
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Decision Strategy

Ignorance of the outcomes of decisions is a common challenge for managers.

Decision options, or the several paths a manager may take in a given circumstance,
are commonplace. The difficulty stems from the fact that the results of these
alternative options are, to a certain degree, unpredictable. We may choose to
introduce a new product to the market, but we can't guarantee that it will be
successful. The decision to purchase state-of-the-art manufacturing equipment to
increase output is up to us, but we don't know what the return on investment will be.
The precise impact on patients and the number of patients treated are unknown,
even if a hospital decides to install state-of-the-art medical scanning equipment
(Smith et al., 2016).

When there is a lot of unknown information about the consequences of a

choice, a risk assessment is an important part of any successful analysis. In these
kinds of unpredictable situations, managers might benefit from using decision
analysis to help them choose the best course of action. Increasing the project's
economic return (by revenue) via leases or sales is another PDC objective, even if
attracting new firms is the new complex's principal purpose. Despite the body is
facing some uncertainties. especially in regard to the predicted interest in units in the
building (PRT, 2021). At that time,When questioned about the probable request for
the units, PDC’s president recognized a broad vast possibilities, yet determined that
it might be appropriate to execute two possible chance Event outcomes: an
increased demand and a declined demand (DT, n.d.).

Pay-off tables

Considering the three possibilities and two different nature states, with which
sophisticated quantity should PDC choose from? To answer this question, they will
need to have vast knowledge on the the repercussions linked to each choice option
and each natural condition. In the choice analysis, we refer to the outcome coming
from a particular combination of a choice option and a condition of nature as a
payout. A table giving payoffs considering each combination of choice options and
states that nature provides is a payback table (C.F, 2016).
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Nature States
DA S1 S2
Sd1 8 7
Md2 14 5
Ld3 20 -9

Decision Tree without expected monetary value

Figure 1:Decision diagram without possibilities

Figure 2: Decision Tree with possibilities

Decision Tree with Probabilities

A decision tree is a strategic tool used to assess and improve decision-

making processes. It assists in optimizing the expected return by managing the
branch leaving decision node 1, resulting to a recommendation of Ld3 with an
estimated value of R14.2 million. This approach may be applied to other choice
dilemmas, such as the PDC problem, if a good number of decision alternatives and
states of nature are available. The decision tree is formed by creating option nodes,
chance nodes, and branches that express the sequential nature of the problem. If
the expected value approach is used, the probabilities for each natural state and the
expected value for each chance node are computed. The decision tree is then
selected, resulting in the alternate option connected to this branch.
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Decision Tree, EMV and Final Decision and Discussion

EV (Node 6)=0 . 94 (8)+0 . 06(7)=7 .94

EV (Node 7)=0 . 94 (14)+0 . 06(5)=13 . 46

EV (Node 8)=0 . 94 (20)+ 0.06(−9)=18.26

EV (Node 9)=0 . 35(8)+0 . 65(7)=7.35

EV (Node 10)=0 . 35(14)+0 . 65(5)=8.15

EV (Node 11)=0 . 35(20)+0 . 65(−9)=1.15

EV (Node 12)=0 . 80(8)+0 . 20(7)=7.80

EV (Node 13)=0 . 80(14)+0 . 20(5)=12.20

EV (Node 14)=0 . 80(20)+ 0. 20(−9)=14.20

First, complete the study. Next, if the study's conclusion is positive, select LD3.
Otherwise, if the conclusion is bad, choose MD2. The highest possible EMV for the
previously mentioned proposed judgment is 15.9347 million rials.
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Abbreviations

F - Failure occurs S - software problem occurs

H - hardware problem occurs O - other problems occurs

Prior probabilities: P(H )=0.1 ; P(S)=0.6 ; P (O)=0.3

Conditional probabilities: P(F∨H )=0.9 ; P(F∨S)=0.2; P( F∨O)=0.5
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Quality Sweaters company

Quality Sweaters company is a manufacturing company dealing with hand

hand-knitted sweaters. Its aim of conducting the mail data collection is to access the
company’s revenue and how the profit is sensitive to the rate of response.

The table below depicts the data as collected by Quality Sweaters company from
their mails and to mark their expectations in terms of profit or loss. In their case, the
outcome proved to be of positive to the company and it is efforts to maintain the
positive outcome.

CATALOT INPUTS Response Mode

Printing FC $20,000 Rate of responses 8%
Printing mailing VC 0.25 NO. RESPONSES 8000

VARIABLES COST AND PROFIT

$100,00 32000
Mails sent 0 TR 0
FC (PRINTING) 20000
Made Orders TOTAL VC (PRINTING) 25000
25760
ORDER AVERAGE 40 T. ORDER COST 0
30260
Cost @ Order 32.2 TC 0
PROFIT 17400

At the rate of response of 8%, the entity expects a positive yield of $17400,
upon receiving 8000 responses from the mails sent. Goal Seek provided an
acknowledgment rate of 5.77% and an income of $0. As a result, if the
acknowledgement rate is 5.77%, the company breaks even. If the initial reaction rate
is more than 5.77%, the firm gains money.

Although the data table findings imply a loss (with no positive revenue) when
the number of responses is The corporation's future view implies a profit of $7.80 per
transaction, with a possibility for an increase in revenue if each respondent
purchases an additional two times, given that many customers are likely to renew in
the future.
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As a result, the corporation may earn $46,800 or $3000 ($7.80) (2), which is
higher than the hypothetical scenario suggests. In this framework, unpredictability is
a factor since the model parameters are known with confidence. However, the
degree of ambiguity is what is crucial. The average size of a client order for Quality
Sweaters companyis known; however, it may fluctuate. As a result, it is more
appropriate to express the possibility that Great Embroidery will break even or that
its earnings will be a specific amount.

According to the findings of this model, Quality Sweaters companyshould

persevere with the postcard initiative, even if the reply rate is just 3%. If they wish to
take a more conservative short-term approach, they should strive for an adequate
response proportion of 5.77%.

To be more precise, a one percentage point increase in the answer rate

always boosts profit by $7,800. This is precisely why each 1% improvement in the
feedback rate leads to 1,000 extra orders. Each order yields an average income of
$40, with an unpredictable cost of $32 and a packing cost of $0.20. As a result, the
net increase in profit is $7.80 per purchase, or $7,800 for 1,000 sales.

response rate Profit

$17, 400
1% $-37,200
2% $-29,400
3% $-21,600
4% $-13,800
5% $-6,000
6% $1,800
7% $9,600
8% $17,400
9% $25,200
10% $33,000
11% $40,800
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RMC,inc Linear Programing

Linear program (LP) or linear optimization may be described as the problem

of optimizing or reducing a linear functional that is subject to regular constraints. The
limitations may be equalities or inequalities. The optimization challenges include
calculating earnings and losses. Linear programming issues are a vital category of
optimization challenges that help locate the feasible area and improve the suggested
solution so that it has the greatest or least amount of function (Admin, 2016).

RMC,inc’s linear programming equations were formulated as follows;

0.4 f +0.5 s ≤ 20 material 1

f =number of tons of fuel 0.2 s ≤5 material 2
0.6 f +0.3 s ≤21 material 3
s ¿ number of tons of solvent base
f ,s≥0

subject ¿(s . t)
Linear programming consists of four components: choice variables,
constraints, objective functions, and non-negativity limitations. Decision parameters
are unknown values in an optimization issue, such as a corporation's production
levels. Constraints are constraints on resources like time and expense (Chatterjee,
2022). Objective units are real-valued equations that need to be carefully optimized
for the lowest or greatest possible output. Non-negativity limitation assures that
decision elements constantly yield positive values, guaranteeing they are larger than
or identical to 0.

Administration research is a decision-making approach that incorporates a

collection of strategies to run a system, such as the supply chain model. It tries to
deliver the delivery on schedule to all six locations. The linear programming
technique is used to get the most optimal solution for a problem with specified
constraints. In this example, the linear depiction of the six locations is an
oversimplification, since the actual route would likely contain several turns, U-turns,
lights, and traffic jams. However, with a simple presumption, the complexity of the
issue is dramatically reduced, giving a solution that ought to exist in most
circumstances (avcontentteam, 2017).
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Using Excel open solver, the model fomulated revealed the number of tons
per item. Fuel Addictive total ton was 25 and the solvent base of 20, giving a
maximizing profit of $1600. The table below ilustrates the the model and the solver
outcome.

Model

Variables
Fuel
Addictive=f Solvent Base=s
Ton produced F&S 25 20

maximize profit = 1600

Contraints amount used amount available

M1 20 <= 20
M2 4 <= 5
M3 21 <= 21

From the graphical analysis, it is evident and recommended that material 1

and 3 has depicted optimal usage of the of quantities available for use, while

material 2 has left part of its available quantity

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Material Output
80
70
60
50
40
30
20
10
0
0 5 10 15 20 25 30 35 40 45

material 1 Material2 material 3

PERT (O, ML, P)

In project administration, the PERT is used to determine the time it takes to perform
a certain job or activity. It is a system that helps with the correct programming and
organization of all jobs during a project. It also helps maintain track of the entire
endeavor's progress, or lack thereof. In the 1950s, the US Navy created a Project
Evaluation Review Technique to oversee its Special Projects Office's Polaris
underwater missile program. Identifying the time it should take to complete a project
is vital, as it helps project directors decide on other elements such as the budget and
task allocation. Estimations matter how large or small an undertaking is, estimations
might be excessively positive or negative, but employing a PERT chart can help
identify accurate estimates (Team, 2024).

Expected Time Calculation

¿+4 tm+tp
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Activity Immediate
O M P ET variance
No Predecessor
1 0.5 1 1.5 1 0.028
2 6 7 8 1 7 0.111
3 12 14 16 1 14 0.444
4 18 21 30 1 22 4.000
5 5 7 9 4 7 0.444
6 13 14 21 1 15 1.778
7 17 21 25 6 21 1.778
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8 6 7 8 1 7 0.111
9 5 5 11 8,12 6 1.000
10 6 8 10 8,12 8 0.444
11 19 20 27 2,3 21 1.778
12 1 2 3 2,5,7 2 0.111
13 7 8 9 10 8 0.111
14 5 7 9 10 7 0.444
15 6 7 8 10 7 0.111
16 7 7 13 10 8 1.000
17 5 6 13 10 7 1.778
18 0.5 1 1.5 9,10,11 1 0.028
1,2,13,14,15,1
19 5 7 9 7 0.444
6
20 1 2 3 5,18,19 2 0.111
21 1.5 2 2.5 20 2 0.028
22 1 1 1 21 1 0.000
23 1 2 3 22 2 0.111

Network Diagram

The table below analyzes the Network diagram and critical path;

Activit Optimistic Most Likely Pessimistic E L E L SLAC

y Duration Duration Duration S S F F K
1 0.5 1 1.5 0 0 1 1 0
3
2 6 7 8 1 30 8 29
7
4
3 12 14 16 1 26 15 25
0
3
4 18 21 30 1 8 23 7
0
3
5 5 7 9 23 30 30 7
7
1
6 13 14 21 1 1 16 0
6
3
7 17 21 25 16 16 37 0
7
3
8 6 7 8 1 32 8 31
9
6
9 5 5 11 39 55 45 16
1
4
10 6 8 10 39 39 47 0
7
6
11 19 20 27 15 40 36 25
1
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3
12 1 2 3 37 37 39 0
9
5
13 7 8 9 47 47 55 0
5
5
14 5 7 9 47 48 54 1
5
5
15 6 7 8 47 48 54 1
5
5
16 7 7 13 47 47 55 0
5
6
17 5 6 13 47 62 54 15
9
6
18 0.5 1 1.5 47 61 48 14
2
6
19 5 7 9 55 55 62 0
2
6
20 1 2 3 62 62 64 0
4
6
21 1.5 2 2.5 64 66 66 0
6
6
22 1 1 1 66 67 67 0
7
6
23 1 2 3 67 69 69 0
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The Critical Paths are;

1 - 6 – 7 – 12 - 10 – 13 – 19 – 20 – 21 – 22 – 23 and 1 – 6 – 7 – 12 – 10 – 16 -19 –

20 – 21 – 22 – 23

Thus, the expected project completion time is 69

Network diagram for the paths;

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For 68 days the value of Z from the critical Path 1-6-7-12-10-13-19-20-21-22-23

Z value={68−69 }/2.22

Z=0.4505

P(Z)=NORMAL DISTRIBUTION (−o .4505)

P(Z)=0.3262

For 68 day the value of Z from the critical Path 1-6-7-12-10-16-19-20-21-22-23

Z value={68−69 }/2.42

Z=0.4132

P(Z)=NORMAL DISTRIBUTION ¿

P(0 Z)=0.3397

The probability to complete the project within or before 68 days

Probability=0.3262∗0.3397

Probability=0.1108
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References
Admin. “Linear Programming (Definition, Methods & Examples).” BYJUS, BYJU’S,
22 Aug. 2016, byjus.com/maths/linear-programming/. Accessed 13 May 2024.
avcontentteam. “What Is Linear Programming? Definition, Methods and Problems for
Data Scientists.” Analytics Vidhya, 28 Feb. 2017,
www.analyticsvidhya.com/blog/2017/02/lintroductory-guide-on-linear-
programming-explained-in-simple-english/
#Solve_Linear_Program_Using_OpenSolver. Accessed 13 May 2024.
Chatterjee, Sanmit. “Professional Certificate in Coding: Full Stack Development with
MERN.” Emeritus Online Courses, MIT xPRO, 16 Dec. 2022,
emeritus.org/blog/coding-what-is-linear-programming/. Accessed 13 May 2024.
Decision Theory.
“FINM7402 - UQ - Corporate Finance - Studocu.” Studocu, Studocu, 2016,
www.studocu.com/row/course/university-of-queensland/corporate-finance/
214156. Accessed 13 May 2024.
“Making Decisions under Uncertainty and Risk - Practical Risk Training.” Practical
Risk Training, 16 Jan. 2021, practicalrisktraining.com/making-decisions-under-
uncertainty-and-risk. Accessed 13 May 2024.
Smith, Clayton, et al. “8.3 Challenges to Effective Decision Making.”
Pressbooks.pub, Pressbooks, 2016,
ecampusontario.pressbooks.pub/educationleadershipmanagement/chapter/8-
3-challenges-to-effective-decision-making/. Accessed 13 May 2024.
Team, CFI. “Project Evaluation Review Technique (PERT).” Corporate Finance
Institute, Corporate Finance Institute, 4 Mar. 2024,
corporatefinanceinstitute.com/resources/management/project-evaluation-
review-technique-pert/. Accessed 13 May 2024.