JGT - Task 4
Decision Analysis tools
The case study involves a decision tree and the
decision making process for
1) opening a new stand-alone store or
2) opening a mall store in two alternative
scenarios a) a favorable market or b) unfavorable
market or 3) deciding not to open any store..
State of Nature 1: In the stand-alone store profit
expected is $700,000 if market is favorable and
loss of $400,000 if market is unfavorable.
State of Nature 2: In the mall store profit
anticipated is around 3lac USD in case of
favorable market and loss of fifty thousand USD
in case of unfavorable market.
State of Nature 3: If no store is opened there
would no profit or loss.
Deciding on Buying a
Market Research Survey
To decide on the options the company has to
decide on whether or not to go in for purchase of
a market research survey which involves a
layout of $20,000 (decision tree - top portion)
and might make either a positive or a negative
repercussion on the market conditions.
A no purchase situation would have no market
Decision based on POM
The previous data if used with the Production &
Operation Management Tool for Windows and if
the highest EMV or the Expected Monetary Value
factor is selected, gives the following results:
If a market research study is decided on and the
criteria of highest EMV is selected then in a best
“chance” scenario of action Shuzworld will have
a favorable market and also a positive survey
The Decision Analytical Module together with Graphic
Decision Tree was selected as it was thought to be the most
suitable decision tool as the choices for Shuzworld could
then be visually observed.
It would also label the best option and display the path
recommended in a blue color.
The design of the decision tree was based on figures from
the 3 scenarios described in the introduction and also...