Phase 4

Solve problems by applying the algorithms of the Unit 2

Stefany Escudero Bejarano CC. 1116273550

Dirley Ibarguen CC
Jorge Cardona CC

National Open and Distance University

Decision theory
October 24, 2018
Valle
 ii

Phase 4
Solve problems by applying the algorithms of the Unit 2

Stefany Escudero Bejarano CC. 1116273550

Dirley Ibarguen CC
Jorge Cardona CC

Group: 212025_19

Tutor. José Maria Jiménez

National Open and Distance University

Decision theory
October 24, 2018
Valle
 3

Introduction

The following report will demonstrate the knowledge and understanding of the
methods, operations and definitions of the different application techniques in
decisions that depend on the type and quality of the information obtained. with the
aim of differentiating the algorithms, their characteristics and application in different
environments of risk and / or uncertainty, for decision making and optimization of the
expected results, Based on thematic of phase 4 that help an optimal solution
 4

Solution exercises phase 4

Problem 1. Laplace, Wald or pessimistic, optimistic, Hurwicz and wild criteria

(Benefit Matrix): (DIRLEY IBARGUEN)

In the ABC company there are several alternatives to choose the best technology of
four possible, whose performance depends on the adaptation of the workers who
manipulate the equipment that is made up. The expected benefits of each alternative
and the degree of adaptation of the workers are given in the table, in millions of
pesos ($). For Hurwicz, please assume an alpha of 0.6

Fits Fits Fits very

Alternative Does not fit Fits well
acceptably successfully well
Technology 1 1140 1185 1230 1290 1335
Technology 2 1350 1260 1260 1245 1200
Technology 3 1200 1275 1320 1350 1380
Technology 4 1365 1320 1305 1290 1275
Technology 5 1335 1320 1335 1365 1410

Criterion of the place

is based on the principle of insufficient reason: as a priori there is no reason to

suppose that a state can be presented before the others, we can consider that all
states have the same probability of occurrence, that is, the absence of knowledge
about the state of nature is equivalent to affirming that all states are equiprobable.

Expected value

Thus, for a decision problem with n possible states of nature, we would assign
probability 1 / n to each one of them.

N=5
 5

We use the average of the place

T1: (1/5) (1140 + 1185 + 1230 + 1290 + 1335) = 1236

T2: (1/5) (1350 + 1260 + 1260 + 1245 + 1200) = 1263

T3: (1/5) (1200 + 1275 + 1320 + 1350 + 1380) = 1305

T4: (1/5) (1365 + 1320 + 1305 + 1290 + 1275) = 1311

T5: (1/5) (1335 + 1320 + 1335 + 1365 + 1410) = 1353

Does Fits Fits Fits very LA

Alternative Fits well
not fit acceptably successfully well PLACE
Technology 1 1140 1185 1230 1290 1335 1236
Technology 2 1350 1260 1260 1245 1200 1263
Technology 3 1200 1275 1320 1350 1380 1305
Technology 4 1365 1320 1305 1290 1275 1311
Technology 5 1335 1320 1335 1365 1410 1353
MAX 1353

This exercise seeks the best adaptation of technology when performing the analysis
by means of the information it is recommended to opt for the

Technology 5, for a value of $ 1353

Situation of uncertainty Ward or Pessimist

It is the conservative criterion, in this type the minimum value of each one of the
states is sought and in the end the highest one is chosen, since the philosophy of
this exercise is the best of the worst, the option chosen could not be the most
optimum
 6

Expected Value

𝑉𝐸 = max⁡(min⁡(𝑅𝐼𝐽 )

Does Fits Fits Fits very

Alternative Fits well WALD
not fit acceptably successfully well
Technology 1 1140 1185 1230 1290 1335 1140
Technology 2 1350 1260 1260 1245 1200 1200
Technology 3 1200 1275 1320 1350 1380 1200
Technology 4 1365 1320 1305 1290 1275 1275
Technology 5 1335 1320 1335 1365 1410 1320
MAX 1320

The minimum value between the states is sought and the maximum value is chosen
among the states, the best of the worst is chosen.

In this exercise the best adaptation of technology is sought when performing the
analysis through the information it is recommended to opt for the

Technology 5, for a value of $ 1320

Situation of uncertainty Optimistic criteria:

This criterion determines and selects the best of the best, so that in the end the
maximum value of each one of the states is taken.

Expected Value

𝑉𝐸 = max⁡(min⁡(𝑅𝐼𝐽 )
 7

Does not Fits Fits Fits very MAXIMUM

c Fits well
fit acceptably successfully well VALUE
Technology 1 1140 1185 1230 1290 1335 1335
Technology 2 1350 1260 1260 1245 1200 1350
Technology 3 1200 1275 1320 1350 1380 1380
Technology 4 1365 1320 1305 1290 1275 1365
Technology 5 1335 1320 1335 1365 1410 1410
MAX 1410
In this exercise we seek the best adaptation of the technology to perform the analysis
by means of the information it is recommended to opt for the

Technology 5 with a value of 1410

Situation of uncertainty criterion of Hurwicz

This criterion determines a series of attitudes from the most lousy to the most optimal
where α is a coefficient of pessimism of (1-α), and the coefficient of optimism of α is
between 0 and 1

𝑉𝐸 = 𝑀𝑎𝑥(𝑅𝑖𝑗 ) ∗𝛼 + 𝑀𝑖𝑛⁡(𝑅𝑖𝑗 ) ∗(1−𝛼)

Fits
Does Fits Fits Fits minimum maximum
Alternative very
not fit acceptably successfully well value value
well
Technology
1140 1185 1230 1290 1335 1140
1 1335
Technology
1350 1260 1260 1245 1200 1200
2 1350
Technology
1200 1275 1320 1350 1380 1200
3 1380
Technology
1365 1320 1305 1290 1275 1275
4 1365
 8

Technology
1335 1320 1335 1365 1410 1320
5 1410
Then we take the minimum and maximum values in the table to take these same
and multiply them by the coefficient α optimism 0.6.

𝑉𝐸 = 𝑀𝑎𝑥(𝑅𝑖𝑗) ∗𝛼 + 𝑀𝑖𝑛(𝑅𝑖𝑗) ∗(1−𝛼)

T1 (1335*0,6)+ 1140*(1-0,6)= 1257

T2 (1350*0,6)+ 1200*(1-0,6)= 1290

T3 (1380*0,6)+ 1200*(1-0,6)= 1308

T4 (1365*0,6)+ 1275*(1-0,6)= 1329

T5 (1410*0,6)+ 1320*(1-0,6)= 1374

minimum maximum
Alternative result
value value
Technology 1 1140 1335 1257
Technology 2 1200 1350 1290
Technology 3 1200 1380 1308
Technology 4 1275 1365 1329
Technology 5 1320 1410 1374
MAX 1374

In this case Technology 5 is taken as a result With a value of $ 1374

Situation of uncertainty SAVAGE criterion

This criterion transforms the matrix of results into a matrix of errors, so that this form,
the person making the decision can easily assess the opportunity costs incurred by
 9

making a wrong decision, so you must determine the best result for every situation
that may arise

Fits
Does Fits Fits Fits
N very
not fit acceptably successfully well
well
Technology
1140 1185 1230 1290 1335
1
Technology
1350 1260 1260 1245 1200
2
Technology
1200 1275 1320 1350 1380
3
Technology
1365 1320 1305 1290 1275
4
Technology
1335 1320 1335 1365 1410
5

The minimum value of each row is taken and begins to subtract with the other rows
of the same column

Does Fits
Fits Fits Fits
N not very
acceptably successfully well
fit well
Technology
1140 1185 1230 1290 1335
1
Technology
1350 1260 1260 1245 1200
2
Technology
1200 1275 1320 1350 1380
3
 10

Technology
1365 1320 1305 1290 1275
4
Technology
1335 1320 1335 1365 1410
5
minimum
1140 1185 1230 1245 1200
value

Penalty table

Fits Fits
N Does not fit Fits well Fits very well
acceptably successfully
1335-
Technology 1 1140-1140=0 1185-1185=0 1230-1230=0 1290-1245=45
1200=135
1350-
Technology 2 1260-1185=75 1260-1230=30 1245-1245=0 1200-1200=0
1140=210
1380-
Technology 3 1200-1140=60 1275-1185=90 1320-1230=90 1350-1245=105
1200=180
1365- 1320-
Technology 4 1305-1230=75 1290-1245=45 1275-1200=75
1140=225 1185=135
1335- 1320- 1335- 1410-
Technology 5 1365-1245=120
1140=195 1185=135 1230=105 1200=210
minimum
1140 1185 1230 1245 1200
value

Result matrix

Does not Fits Fits Fits very maximum

N Fits well
fit acceptably successfully well value
Technology 1 0 0 0 135 135 135
Technology 2 210 75 30 0 0 210
 11

Technology 3 60 90 90 180 180 180

Technology 4 225 135 75 75 75 225
Technology 5 195 135 105 210 210 210
minimum
value 135
Results

Método Resultado
la place 1353
pessimist 1320
optimistc 1410
hurvicz 1374
savage 210

Results table using the software

PROPOSED STRATEGY

PART 5. CRITERIA OF LAPLACE, WALD OR PESIMISTA, OPTIMISTA,

HURWICZ AND SAVAGE (MATRIX OF BENEFITS):
 12

According to the initial table by applying the criteria criteria of Laplace, Wald or
pessimistic, optimistic, Hurwicz and Savage determine what is the level of optimal
decision according to the criteria of benefits.

Fits Fits Fits very

Alternative Does not fit Fits well
acceptably successfully well

Technology 1 1140 1185 1230 1290 1335

Technology 2 1350 1260 1260 1245 1200

Technology 3 1200 1275 1320 1350 1380

Technology 4 1365 1320 1305 1290 1275

Technology 5 1335 1320 1335 1365 1410

The following results were obtained by each of the methods

Método Resultado
la place 1353
pesimista 1320
optimista 1410
hurvicz 1374
savage 210

When analyzing each of the results obtained with the methods used, it can be said
that the optimal decision is technology 5, since it would represent the best
performance for the processes that are to be implemented within the company.
 13

Problem 2. Criteria of Laplace, Wald or pessimist, optimist, Hurwicz and

Savage (Cost Matrix): (JORGE CASTAÑO)

A warehouse of finished products that leases its services to imports from the USA.
UU You must plan your supply level to meet the demand of your customers on the
day of love and friendship. The exact number of boxes is not known, but it is
expected to fall into one of five categories: 510, 620, 650, 710 and 730 boxes.
Therefore, there are four levels of supply. It is expected that the deviation of the
quantity of hoppers will generate additional costs, either due to excessive supply or
because the demand can not be satisfied. The following table shows the costs in
hundreds of dollars (US $). For Hurwicz, please assume an alpha of 0.65.

Event
e1(580) e2(720) e3(750) e4(790) e5(830)
Alternative
e1(580) 1571 1620 2065 2201 2561
e2(720) 1515 1859 2005 2192 2645
e3(750) 1554 1669 2115 2217 2406
e4(790) 1370 1809 2062 2295 2374
e5(830) 1451 1867 2100 2250 2473

Laplace

Alternative/Evento e1(580) e2(720) e3(750) e4(790) e5(830) ∑

e1(580) 1571 1620 2065 2201 2561 2003,6

e2(720) 1515 1859 2005 2192 2645 2043,2
e3(750) 1554 1669 2115 2217 2406 1992,2
e4(790) 1370 1809 2062 2295 2374 1982
e5(830) 1451 1867 2100 2250 2473 2028,2

The alternative that was chosen to see the equiprovable events is E4 with an
expected value of 1982

Wald or pessimist

Alternative/Evento e1(580) e2(720) e3(750) e4(790) e5(830) Min

e1(580) 1571 1620 2065 2201 2561 1571

e2(720) 1515 1859 2005 2192 2645 1515
e3(750) 1554 1669 2115 2217 2406 1554
e4(790) 1370 1809 2062 2295 2374 1370
e5(830) 1451 1867 2100 2250 2473 1451
 14

Optimistic

Alternative/Evento e1(580) e2(720) e3(750) e4(790) e5(830) Max

e1(580) 1571 1620 2065 2201 2561 2561

e2(720) 1515 1859 2005 2192 2645 2645
e3(750) 1554 1669 2115 2217 2406 2406
e4(790) 1370 1809 2062 2295 2374 2374
e5(830) 1451 1867 2100 2250 2473 2473

Hurwicz α= 0,65 Pesimismo 0,35

Alternativa/Evento e1(580) e2(720) e3(750) e4(790) e5(830) VM

e1(580) 1571 1620 2065 2201 2561 1917,5
e2(720) 1515 1859 2005 2192 2645 1910,5
e3(750) 1554 1669 2115 2217 2406 1852,2
e4(790) 1370 1809 2062 2295 2374 1721,4
e5(830) 1451 1867 2100 2250 2473 1808,7

ANSWER
Considering an array of possibilities and with an optima probability of 0.65, the alternative
to choose is e4 with 1721.4

Criterio de Savage

Alternativa/Evento e1(580) e2(720) e3(750) e4(790) e5(830)

e1(580) 1571 1620 2065 2201 2561
e2(720) 1515 1859 2005 2192 2645
e3(750) 1554 1669 2115 2217 2406
e4(790) 1370 1809 2062 2295 2374
e5(830) 1451 1867 2100 2250 2473
1370 1620 2005 2192 2374
MATRIZ DE
ERRORES
Alternativa/Evento e1(580) e2(720) e3(750) e4(790) e5(830)
e1(580) -201 0 -60 -9 -187 -201
e2(720) -145 -239 0 0 -271 -271
e3(750) -184 -49 -110 -25 -32 -184
e4(790) 0 -189 -57 -103 0 -189
e5(830) -81 -247 -95 -58 -99 -247

ANSWER
 15

The OPTIMA solution is e2

with -271

Problem 3. Criteria of Laplace, Wald or pessimist, optimist, Hurwicz and

Savage (Cost Matrix): (JORGE CASTAÑO)

A warehouse of finished products that leases its services to imports from the USA.
UU You must plan your supply level to meet the demand of your customers on the
day of love and friendship. The exact number of boxes is not known, but it is
expected to fall into one of five categories: 580, 720, 750, 790 and 830 boxes.
Therefore, there are four levels of supply. It is expected that the deviation of the
quantity of hoppers will generate additional costs, either due to excessive supply or
because the demand can not be satisfied. The following table shows the costs in
hundreds of dollars (US $). For Hurwicz, please assume an alpha of 0.55.
 16

Event
e1(580) e2(720) e3(750) e4(790) e5(830)
Alternative
e1(580) 1088 1144 982 1019 1032 1069
e2(720) 982 1175 1019 857 1019 1057
e3(750) 1019 1069 1138 1044 1094 1182
e4(790) 957 1019 932 1200 1032 932
e5(830) 1044 1007 1032 894 1188 1200

Laplace

Alternative/Evento e1(580) e2(720) e3(750) e4(790) e5(830) ∑

e1(580) 1144 982 1019 1032 1069 1049,2

e2(720) 1175 1019 857 1019 1057 1025,4
e3(750) 1069 1138 1044 1094 1182 1105,4
e4(790) 1019 932 1200 1032 932 1023
e5(830) 1007 1032 894 1188 1200 1064,2

pesimist

Alternative/Evento e1(580) e2(720) e3(750) e4(790) e5(830) Min

e1(580) 1144 982 1019 1032 1069 982

e2(720) 1175 1019 857 1019 1057 857
e3(750) 1069 1138 1044 1094 1182 1044
e4(790) 1019 932 1200 1032 932 932
e5(830) 1007 1032 894 1188 1200 894

optimist

Alternative/Evento e1(580) e2(720) e3(750) e4(790) e5(830) Max

e1(580) 1144 982 1019 1032 1069 1144

e2(720) 1175 1019 857 1019 1057 1175
e3(750) 1069 1138 1044 1094 1182 1182
e4(790) 1019 932 1200 1032 932 1200
e5(830) 1007 1032 894 1188 1200 1200
 17

Hurwicz α= 0,55 Pesimist 0,45

Alternative/Evento e1(580) e2(720) e3(750) e4(790) e5(830) VM

e1(580) 1144 982 1019 1032 1069 1054,9
e2(720) 1175 1019 857 1019 1057 1000,1
e3(750) 1069 1138 1044 1094 1182 1106,1
e4(790) 1019 932 1200 1032 932 1052,6
e5(830) 1007 1032 894 1188 1200 1031,7

ANSWER
Considering an array of possibilities and with a probability of optima of
0.55, the alternative to choose is e2 with 1000.1

Savage

Alternative/Evento e1(580) e2(720) e3(750) e4(790) e5(830)

e1(580) 1144 982 1019 1032 1069
e2(720) 1175 1019 857 1019 1057
e3(750) 1069 1138 1044 1094 1182
e4(790) 1019 932 1200 1032 932
e5(830) 1007 1032 894 1188 1200
1007 932 857 1019 932
ERROR MATRIX

Alternative/Evento e1(580) e2(720) e3(750) e4(790) e5(830) Min

e1(580) -137 -50 -162 -13 -137 -162
e2(720) -168 -87 0 0 -125 -168
e3(750) -62 -206 -187 -75 -250 -250
e4(790) -12 0 -343 -13 0 -343
e5(830) 0 -100 -37 -169 -268 -268

ANSWER
The OPTIMA solution is e2
with -271
 18

Método Resultado
la place 1105
pesimista 1044
optimista 1200
hurvicz 1120
savage -268

Problem 4. Game theory method: (Stefany Ecsudero)

Graphic solutions are only applicable to games in which at least one of the players has
only two strategies. Consider the following game 2 x n:

Player 2
Strategy
A B C
Player I 25 33 29
1 II 32 27 29
 19

Pantallazo excel solver

 20

Problem 5. Game theory method: (Stefany Escudero)

Graphic solutions are only applicable to games in which at least one of the players
has only two strategies. Consider the following game m x 2:

Player 2
Strategy
A B
I 23 31
Player 1 II 29 25
II 26 29

Player 2
Strategy Min
A B
I 23 31 23
Player 1 II 29 25 25
II 26 29 26
Max 29 31

26 Maximin
29 Minimax

Maximin ≠ minimax = there is no PSM

 21

Player 2
Strategy DF VA PROPABILITY
A B
II 29 25 4 3 3/7
Player 1
II 26 29 -3 4 4/7
DF 3 -4
VA 3 7
PROPABILITY 4/7 3/7

EM Player 1: (3/7, 4/7)

EM Player 2: (4/7, 3/7)

Value of the game

Vi
Exp. Player 1(I) = (4/7 * 23) + (3/7 * 31) = 26,42
Exp. Player 1(II) = (4/7 * 29) + (3/7 * 25) = 27.28
Exp. Player 1(III) = (4/7 * 26) + (3/7 * 29) = 27.28

Exp. Player 2 (A) = (3/7 * 29) + (4/7 * 26) = 27.28

Exp. Player 2 (B) = (3/7 * 25) + (4/7 * 29) = 27.28

Solution excel solver

 22

Problem 6. Optimal solution of games for two people:

The games represent the last case of lack of information. The result is that generally
a very conservative criterion is proposed to solve groups of people and add zero,
called minimax - maximin criterion. To determine a fair game, minimax = maximin, it
is necessary to solve the stable strategy through the Solver.

Pantallazo excel solver

 23

Conclusions

 When developing the activity, it was possible to put into practice the topics of
unit 2 of the theory course of decisions, from the solution and analysis of
everyday problems evaluating the knowledge in front of the topics, being able
to develop algorithms giving solutions to different situations (Stefany
Escudero)
 24

REFERENCES

Joyce, J. (1999). The Foundations of Causal Decision Theory. Camdridge, UK:

Cambridge University Press Editorial. Retrieved
from http://bibliotecavirtual.unad.edu.co:2051/login.aspx?direct=true&db=nlebk&A
N=228167&lang=es&site=eds-live
.
Prisner, E. (2014). Game Theory. Washington, District of Columbia, USA:
Mathematical Association of America Editorial. Retrieved
from http://bibliotecavirtual.unad.edu.co:2051/login.aspx?direct=true&db=nlebk&A
N=800654&lang=es&site=eds-live
.
Owen, G. (2013). Game Theory: Monterey, California, USA: Naval Postgraduate
School Editorial. Retrieved
from http://bibliotecavirtual.unad.edu.co:2048/login?url=http://search.ebscohost.co
m/login.aspx?direct=true&db=nlebk&AN=525603&lang=es&site=ehost-live

Arsham, H. (2015). Decision Making Under Risk, USA: University of Baltimore

Editorial. Retrieved from http://home.ubalt.edu/ntsbarsh/Business-
stat/otherapplets/DaRisky.htm