Introduction

The objective of the work is to acquire new knowledge to apply in the

development of activities.

The material available to appropriate the knowledge and notions of Theory of

decisions was very important.

Important for decision making in problems where information is not known

with certain
 Exercise 1. Markov chains (steady state):

Contribution of Elver

A company dedicated to manufacturing different turned parts must decide

whether to manufacture a new product at its main plant, or if it buys it from an

outside supplier. The profits depend on the demand of the product. Table 10 shows

projected profits, in millions of pesos.

According to the corresponding information in Table 1 and the Predicted Value

of Perfect Information (EVPI) theory, the Expected Value of Sample Information

(EVMI) and Decision Trees, respond:

 Contribution of Mauricio

A company dedicated to manufacturing different turned parts must decide

whether to manufacture a new product at its main plant, or if it buys it from an

outside supplier. The profits depend on the demand of the product. Table 10 shows

projected profits, in millions of pesos.

According to the corresponding information in Table 1 and the Predicted Value

of Perfect Information (EVPI) theory, the Expected Value of Sample Information

(EVMI) and Decision Trees, respond:

a. Use EVPI to determine if the company should try to get a better estimate of the demand.
 Demand low Demand
Demand Low - Demand
Decisión altenative average - medium -
Utility high - utility
Utility Utility

Manufacture 124 138 150 165

Subcontract 129 143 167 180
Buy 122 148 169 188
Lease 116 152 158 171
Outsource 119 131 167 172
Pobabilities ∑=1 0.25 0.3 0.3 0.15

a. Use EVPI to determine if the company should try to get a better estimate of the demand.

Low 0.25 124

Manufacture Node 2 Low average 0.3 138 142.15
Medium 0.3 150
High 0.15 165

Low 0.25 129

Subcontract Node 3 Low average 0.3 143 152.25
Medium 0.3 167
High 0.15 180

Low 0.25 122

Node 1 -
Decision
It would be recommended to

Result
Node 1 Buy Node 4 Low average 0.3 148 153.8 Node 4: manufacture with an expected value of
153.8 Medium 0.3 169 153.8 $482.39 million for being the one that
High 0.15 188

Low 0.25 116

Lease Node 5 Low average 0.3 152 147.65
Medium 0.3 158
High 0.15 171

Low 0.25 119

Outsource Node 5 Low average 0.3 131 144.95
Medium 0.3 167
High 0.15 172

Expected Value of perfect information

EVPI EV With PI - EV Without PI
EV With PI 156.75
EV Without PI 153.8
EVPI 2.94999999999999
 Demand low Demand
Demand Low -
Decisión altenative average - medium -
Utility
Utility Utility

Exercise 2. Markov chains (Initial state multiplication):

Contribution of Elver

The company is thinking of acquiring machinery with new technology to carry

out its workshop work. The purchase will be decided according to several

alternatives presented by the seller (adaptability), this to facilitate the

implementation in the workshop. The decision variables presented below represent

the cost of adaptation that will arise after acquiring the machinery and training the

workers in their use.

 Determine the optimal size of the premises to be purchased, using the

methods of

LAPLACE, WALD, HURWICZ AND SAVAGE. Hurwicz Alpha 0,70.

 Contribution of Mauricio

The company is thinking of acquiring machinery with new technology to carry

out its workshop work. The purchase will be decided according to several

alternatives presented by the seller (adaptability), this to facilitate the

implementation in the workshop. The decision variables presented below represent

the cost of adaptation that will arise after acquiring the machinery and training the

workers in their use.

 Determine the optimal size of the premises to be purchased, using the

methods of

LAPLACE, WALD, HURWICZ AND SAVAGE. Hurwicz Alpha 0,70.

Criterion of Laplace

1/5 1/5 1/5 1/5 1/5

Fits Fits Fits very

Does not fit Fits well
acceptably successfully well

Technology 1 2118 2168 2213 2265 2330

Technology 2 2109 2158 2245 2252 2328
Technology 3 2145 2177 2232 2256 2303
Technology 4 2130 2166 2206 2255 2322
Technology 5 2128 2165 2213 2275 2335

Criterion of wald pessimistic

Fits Fits Fits very

Does not fit Fits well
acceptably successfully well

Technology 1 2118 2168 2213 2265 2330

Technology 2 2109 2158 2245 2252 2328
Technology 3 2145 2177 2232 2256 2303
Technology 4 2130 2166 2206 2255 2322
Criterion of Laplace

1/5 1/5 1/5 1/5 1/5

Fits Fits Fits very

Does not fit Fits well
acceptably successfully well

Technology 1 2118 2168 2213 2265 2330

Technology 2 2109 2158 2245 2252 2328
Technology 3 2145 2177 2232 2256 2303
Technology 4 2130 2166 2206 2255 2322
Technology 5 2128 2165 2213 2275 2335

Criterion of wald pessimistic

Fits Fits Fits very

Does not fit Fits well
acceptably successfully well

Technology 1 2118 2168 2213 2265 2330

Technology 2 2109 2158 2245 2252 2328
Technology 3 2145 2177 2232 2256 2303
Technology 4 2130 2166 2206 2255 2322
 Problem 3. Decision in uncertainty:

Contribution of Elver

Find the saddle point of the data given below in table 12 for players A and B.
 Problem 4. Decision in uncertainty:

Contribution of Elver

In order to determine the decision conditions in the market, the Game Theory

will be used, using the graphical solution of the type (2 x N) to estimate the strategy

and value of the game for the following data:

 Contribution of Mauricio

In order to determine the decision conditions in the market, the Game Theory

will be used, using the graphical solution of the type (2 x N) to estimate the strategy

and value of the game for the following data:

 Demand low Demand
Demand Low - Demand
Decisión altenative average - medium -
Utility high - utility
Utility Utility

Manufacture 124 138 150 165

Subcontract 129 143 167 180
Buy 122 148 169 188
Lease 116 152 158 171
Outsource 119 131 167 172
Pobabilities ∑=1 0.25 0.3 0.3 0.15

a. Use EVPI to determine if the company should try to get a better estimate of the demand.

Low 0.25 124

Manufacture Node 2 Low average 0.3 138 142.15
Medium 0.3 150
High 0.15 165

Low 0.25 129

Subcontract Node 3 Low average 0.3 143 152.25
Medium 0.3 167
High 0.15 180

Low 0.25 122

Node 1 -
Decision
Result
Node 1 Buy Node 4 Low average 0.3 148 153.8 Node 4:
153.8 Medium 0.3 169 153.8
High 0.15 188

Low 0.25 116

Lease Node 5 Low average 0.3 152 147.65
Medium 0.3 158
High 0.15 171

Low 0.25 119

Outsource Node 5 Low average 0.3 131 144.95
Medium 0.3 167
 Demand low Demand
Demand Low - Demand
Decisión altenative average - medium -
Utility high - utility
Utility Utility

Manufacture 124 138 150 165

Subcontract 129 143 167 180
Buy 122 148 169 188
Lease 116 152 158 171
Outsource 119 131 167 172
Pobabilities ∑=1 0.25 0.3 0.3 0.15

a. Use EVPI to determine if the company should try to get a better estimate of the demand.

Low 0.25 124

Manufacture Node 2 Low average 0.3 138 142.15
Medium 0.3 150
High 0.15 165

Low 0.25 129

Subcontract Node 3 Low average 0.3 143 152.25
Medium 0.3 167
High 0.15 180

Low 0.25 122

Node 1 -
Decision
Result
Node 1 Buy Node 4 Low average 0.3 148 153.8 Node 4: It would be recommended to
manufacture with an expected value of
153.8 Medium 0.3 169 153.8 $482.39 million for being the one that
High 0.15 188

Low 0.25 116

Lease Node 5 Low average 0.3 152 147.65
Medium 0.3 158
High 0.15 171

Low 0.25 119

Outsource Node 5 Low average 0.3 131 144.95
 Problem 5. Markov decision problem:

Contribution of Elver

An insurance company charges its customers according to their accident

history. If you have not had accidents the last two years are charged US $ 6000

(State 1); If you have had an accident in each of the last two years you will be

charged $ 6300 (State 2). If you had accidents the first of the last two years US $

5800 (State 3). The probabilities of the state according to historical data of three

years are:
 Problem 6. Markov decision problem:

Contribution of Elver

Suppose you get 6 types of Jeans brands in the Colombian market: Brand 1,

Brand 2, Brand 3, Brand 4, Brand 5 and Brand 6. The following table shows the

odds that you continue to use the same brand or change it.

At present, brand, have the following percentages in market share respectively

(20%, 25%, 15%, 15%, 20% y 5%) during week 4.

 Contribution of Mauricio

Suppose you get 6 types of Jeans brands in the Colombian market: Brand 1,

Brand 2, Brand 3, Brand 4, Brand 5 and Brand 6. The following table shows the

odds that you continue to use the same brand or change it.

At present, brand, have the following percentages in market share respectively

(20%, 25%, 15%, 15%, 20% y 5%) during week 4.

 Demand low Demand
Demand Low - Demand
Decisión altenative average - medium -
Utility high - utility
Utility Utility

Manufacture 124 138 150 165

Subcontract 129 143 167 180
Buy 122 148 169 188
Lease 116 152 158 171
Outsource 119 131 167 172
Pobabilities ∑=1 0.25 0.3 0.3 0.15

a. Use EVPI to determine if the company should try to get a better estimate of the dema

Low 0.25
Manufacture Node 2 Low average 0.3
Medium 0.3
High 0.15
 Bibliography
Dynkin, E. (1982). Markov Processes and Related Problems of

Analysis:Oxford, UK: Mathematical Institute Editorial. Retrieved

from http://bibliotecavirtual.unad.edu.co:2048/login?

url=http://search.ebscohost.com/login.aspx?

direct=true&db=e000xww&AN=552478&lang=es&site=ehost-live

Ibe, O. (2013). Markov Processes for Stochastic Modeling: Massachusetts,USA:

University of Massachusetts Editorial. Retrieved

from http://bibliotecavirtual.unad.edu.co:2051/login.aspx?

direct=true&db=nlebk&AN=516132&lang=es&site=eds-live

Pineda, R. (2017). Virtual learning object Unit 3. Markov decision processes.

[Video File]. Retrieved from http://hdl.handle.net/10596/13271

Piunovskiy, A. (2012). Examples In Markov Decision Processes: Singapore:

Imperial College Press Optimization Series. Retrieved

from http://bibliotecavirtual.unad.edu.co:2051/login.aspx?

direct=true&db=nlebk&AN=545467&lang=es&site=eds-live