Tutorial 1- solutions

Question 1:
There is no single decision system that will exclusively solve the problem. Moreover, there is no
perfect system; each one will have advantages and disadvantages. However, several intelligent models
can reasonably approach it.
1. We may consider the following as valid criteria for selection: age, beauty, social status, values,
financial situation.
2. We may set a scale for each criteria say from 0 to 10, the higher, the better.
3. We may assign importance weights to the various criteria and calculate the corresponding
weighted average and pick the one having the highest score.
4.

Age Beauty Social status Values Financial situation Weighted score

10% 15% 20% 30% 25%
Candidate 1 5 5 7 3 6 5.05
Candidate 2 8 8 2 6 10 6.7
Candidate 3 6 4 9 8 2 5.9
Candidate 4 10 1 5 10 7 6.9

Consequently, candidate 4 (the ugliest guy) will be selected.

5. The strengths of the system include the fact of incorporating legitimate and common selection
criteria in the selection process. Moreover, the system accounts for the relative importance of
each criterion. For the weaknesses however the system ended up choosing the ugliest candidate
which need not be applied in real life. Moreover, it does not have eliminating factors such as very
low score related to some important criteria such as values (for instance being extremely poor or
illiterate).
6. Successful marriage, sustainable marriage, happiness…

Question 2
1. Two alternatives:
• Build Computers
• Sell Rights
States of nature:
• Sell 10,000 computers
• Sell 100,000 computers
Payoff Table

States of Nature
Alternatives Sell 10,000 Sell 100,000
Build Computers $0 m $54 m
Sell Rights $15 m $15 m
 Sell 10,000 Coûts
2. 0

Build
Computers
Sell 100,000
54

Sell 10,000
Sell Rights 15

Sell 100,000 15

Question 3

1. Payoff table
Demand
15 16 17 18
15 30 26 22 18
Quantity
Ordered

16 22 32 28 24
17 14 24 34 30
18 6 16 26 36

Question 4
State of Good day/easy Bad day/easy Good day/tough Bad day/tough
nature exam exam exam exam

Area
BA 80 60 70 35
IT 88 55 75 0
FIN 90 50 60 30
MKG 95 70 70 55
ACC 100 60 40 20

1. If he is extremely optimistic, he should go with ACC that yields the highest possible grade.
2. If he is extremely pessimistic, he should go with MKG that has 55 as the lowest grade, which is
higher than the lowest in all other subjects.
3. No, Laplace criterion is not appropriate as it does distinguish between grades that exceed/go
below 60 which yield the same decision to pass/fail. One may select the subject that has the
passing grade in the maximum number of scenarios. In case of equality, the subject having the
highest Laplace score will be selected. In the case of interest, both BA and MKG have 3
favorable scenarios. However, MKG has higher Laplace score of 72.5 against 61.25 for BA.
Hence, the choice would be to opt for MKG.
Question 5

E1 E2 Max Min *Max + (1-)*Min

A1 x 3 Max(x, 3) Min(x, 3) (Max(x, 3) + Min(x, 3))/2
A2 4 2 4 2 3
A3 5 1 5 1 3
1. Pessimistic approach
If x < 2, then A2 is the best alternative.
If x = 2, then we are indifferent between A1 and A2.
If x > 2, then A1 is the best alternative.

2. If x < 3, then Max(x, 3) = 3 and Min(x, 3) = x and we are indifferent between A2 and A3.
If x = 3, then Max(x, 3) = Min(x, 3) = 3 and we are indifferent between A1, A2, and A3.
If 3 < x, then Max(x, 3) = x and A1 is the best alternative.