4/10/25, 7:51 AM BUSOBA 2321 Midterm LATEST VERIFIED VERSION
BUSOBA 2321 Midterm EXAM LATEST VERSION
2025 WITH COMPLETE QUESTIONS AND
SOLUTION 100% VERIFIED ANSWERS A+
range of
solutions
ex:
EMV Max
0 <= p <= .3 A
.3 <= p <= .7 B
.7 <= p <= 1 C
- find these by setting EMV's = to each other
- this is the line that is made
when all EMV's are graphed
and you are looking at the
maximum solutions
GRADED FREE
1/5
, 4/10/25, 7:51 AM BUSOBA 2321 Midterm LATEST VERIFIED VERSION
EVwPI is what on a graph A line created by connecting the two highest points on either
side of the y axis's
Slope + y int
EVwPI calculation Slope = Rise / Run (run = 1-0 bc probability
from 0-1 is on the x axis) Y int = look at point
on graph (left y int.)
expected value of perfect info (aka cost of perfect info)
- it's the vertical distance between the EMV Max and
EVPI means
the EVwPI (given a specific probability)
- amount by which perfect info would increase expected payoff
EVwPI-EMV Max, where EMV Max is the equation of the
EVPI calculation line that has the highest solution at the given
probability
- simplify these lines then plug in the probability to solve for p
square - decision tree decision, no calculation
circle - decision tree EMV, state of nature, calculation
- take long time
strategic decision - significant consequences for
incorrect decision (ex: mergers
and acquisitions, buying a
house)
- take significant amount of time
tactical decision - high consequences for
incorrect decision (forecasting
product production, buying a
car)
- take limited amount of time
operational decision - low consequences for an incorrect decision
(ex: assigning employees to jobs, purchasing lunch)
pure strategy strategy not based on probability ( MAXIMIN, MINIMAX Regret)
expected opportunity loss
EOL means
- best decision will be the least costly
when "n" states of nature p= 1/n
SUM (regret of outcome * probability)
EOL calculation
- repeat for each option (row), choose smallest
SUM (payoff of outcome * probability)
EMV calculation
- repeat for each option (row), choose largest
2/5
BUSOBA 2321 Midterm EXAM LATEST VERSION
2025 WITH COMPLETE QUESTIONS AND
SOLUTION 100% VERIFIED ANSWERS A+
range of
solutions
ex:
EMV Max
0 <= p <= .3 A
.3 <= p <= .7 B
.7 <= p <= 1 C
- find these by setting EMV's = to each other
- this is the line that is made
when all EMV's are graphed
and you are looking at the
maximum solutions
GRADED FREE
1/5
, 4/10/25, 7:51 AM BUSOBA 2321 Midterm LATEST VERIFIED VERSION
EVwPI is what on a graph A line created by connecting the two highest points on either
side of the y axis's
Slope + y int
EVwPI calculation Slope = Rise / Run (run = 1-0 bc probability
from 0-1 is on the x axis) Y int = look at point
on graph (left y int.)
expected value of perfect info (aka cost of perfect info)
- it's the vertical distance between the EMV Max and
EVPI means
the EVwPI (given a specific probability)
- amount by which perfect info would increase expected payoff
EVwPI-EMV Max, where EMV Max is the equation of the
EVPI calculation line that has the highest solution at the given
probability
- simplify these lines then plug in the probability to solve for p
square - decision tree decision, no calculation
circle - decision tree EMV, state of nature, calculation
- take long time
strategic decision - significant consequences for
incorrect decision (ex: mergers
and acquisitions, buying a
house)
- take significant amount of time
tactical decision - high consequences for
incorrect decision (forecasting
product production, buying a
car)
- take limited amount of time
operational decision - low consequences for an incorrect decision
(ex: assigning employees to jobs, purchasing lunch)
pure strategy strategy not based on probability ( MAXIMIN, MINIMAX Regret)
expected opportunity loss
EOL means
- best decision will be the least costly
when "n" states of nature p= 1/n
SUM (regret of outcome * probability)
EOL calculation
- repeat for each option (row), choose smallest
SUM (payoff of outcome * probability)
EMV calculation
- repeat for each option (row), choose largest
2/5
