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ECC415 Assignment1

The document is an assignment question from an ECC415 Decision Making course. It contains 3 questions: 1) A probability question asking the businessman to calculate conditional probabilities and determine if he should open a hotel. 2) A decision making question involving expected values to determine the best alternative among investment options. 3) Another decision making question involving weighted additive modeling, lexicographic modeling, and frequency of good/bad features modeling to determine the best city among alternatives described by various attributes.

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43 views3 pages

ECC415 Assignment1

The document is an assignment question from an ECC415 Decision Making course. It contains 3 questions: 1) A probability question asking the businessman to calculate conditional probabilities and determine if he should open a hotel. 2) A decision making question involving expected values to determine the best alternative among investment options. 3) Another decision making question involving weighted additive modeling, lexicographic modeling, and frequency of good/bad features modeling to determine the best city among alternatives described by various attributes.

Uploaded by

fsocitey010
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ECC415 Decision Making

Fall semester 2023/2024

Assignment1 Name:abduselam ahmed yassin


Questions: Stu.num:20194710
Department: computer Eng

1. (10 points) The businessman is going to open a hotel in the centre of the city. His prior probabilities 2000 clients
35%, 1600 clients 40%, 1700 clients 25%. After some period of time the businessman changed his opinion
about the number of clients conditional probabilities 2000 clients 50%, 1600 clients 35%, 1700 clients 15%.
Should businessman open the hotel?. ( Probabilistic Reasoning)

Solution1.
state Prior cond Joint Pr. Posterior Pr.
2000 0.35 0.50 0.35*0.50=0.175 0.175/14.21=0.213
1600 0.40 0.35 0.40*0.35=14 14/14.21=0.985
1700 0.25 0.15 0.25*0.15=0.037 0.037/14.21=2.603
Total=14.21 Total= 3.801

2. (10 points). The following alternatives and State of Nature described in the following table:
a). Calculate expected value for each alternatives and define best alternative.
b). Use expected value of perfect information model and Calculate EVPI.
c). Use expected opportunity loss table and choose the best alternative.
State of Nature
Alternatives Good economy Poor economy
Apartment Building $50000 $30000
Office Building $100000 -$40000
Warehouse $30000 $10000
probability 0.6 0.4

Solution2.
A)
EV(Apartment) = (0.6 * $50,000) + (0.4 * $30,000) = $30,000 + $12,000 = $42,000
EV(Office) = (0.6 * $100,000) + (0.4 * -$40,000) = $60,000 - $16,000 = $44,000
EV(Warehouse) = (0.6 * $30,000) + (0.4 * $10,000) = $18,000 + $4,000 = $22,000
BEST ALTERNATIVE: EV(Office)=44,000

EV(Apartment) = (0.6 * $50,000) + (0.4 * $30,000) = $30,000 + $12,000 = $42,000


EV(Office) = (0.6 * $100,000) + (0.4 * -$40,000) = $60,000 - $16,000 = $44,000
EV(Warehouse) = (0.6 * $30,000) + (0.4 * $10,000) = $18,000 + $4,000 = $22,000
The best value in the colum=(0.6)*(100000)+(0.4)*(30000)=72,000

B)
EV W/O PI= 44,000
EV W PI= 72,000

EVPI=44,000-72,000= 28,000
C)
Expected Opportunity Loss(EOL)

EOL(Apartment) = $50,000 - $42,000 = $8,000


EOL(Office) = $100,000 - $44,000 = $56,000
EOL(Warehouse) = $30,000 - $22,000 = $8,000
BSET ELTERNATIVE = both Apartment Building and Warehouse

3. (10 points) The following alternatives and attributes described in the following table:
What is your correct decision if you use:
a).Weighted Additive Model and choose the best alternative.
b).Lexicographic. 1). Choose the alternative that maximizes the most important attribute.2) Break ties by
looking at the next most important attribute. 3). Repeat 2 or 3 as needed.
c).Frequency of good and bad features. 1.Determine reference point for each attribute that ‘good’ from
‘bad’ (e.g 2.5). 2.Choose the alternative that maximizes’ good’ or minimizes’ bad’
Alternatives/ Attributes Climate Arts Recreation Cost of Living Crime
Atlanta 4 3 4 2 0
Boston 3 4 5 0 0
Chicago 4 3 2 2 2
Denver 2 3 2 0 1
Weight 5 4 3 2 1
Note: no reason to build the table for a, b, c, show only the steps and reasalts for each solutions.

Solution3.

A)
Atlanta: (4 * 5) + (3 * 4) + (4 * 3) + (2 * 2) + (0 * 1) = 20 + 12 + 12 + 4 + 0 = 48

Boston: (3 * 5) + (4 * 4) + (5 * 3) + (0 * 2) + (0 * 1) = 15 + 16 + 15 + 0 + 0 = 46

Chicago: (4 * 5) + (3 * 4) + (2 * 3) + (2 * 2) + (2 * 1) = 20 + 12 + 6 + 4 + 2 = 44

Denver: (2 * 5) + (3 * 4) + (2 * 3) + (0 * 2) + (1 * 1) = 10 + 12 + 6 + 0 + 1 = 29

The best alternative based on the Weighted Additive Model is (Atlanta) with a score of (48).

B)
First, we maximize Climate:
Atlanta has a Climate score of 4.
Boston has a Climate score of 3.
Chicago has a Climate score of 4.
Denver has a Climate score of 2.
Atlanta and Chicago are tied based on Climate.

Next, we move to Arts:


Atlanta has an Arts score of 3.
Chicago has an Arts score of 3.
Atlanta and Chicago are still tied, so we continue to the next attribute.
We move to Recreation:
Atlanta has a Recreation score of 4.
Chicago has a Recreation score of 2.
Atlanta is the winner in terms of Recreation.
Therefore, based on the Lexicographic Model, Atlanta is the best alternative.

C)

Atlanta:
Climate (4) is "good."
Arts (3) is "good."
Recreation (4) is "good."
Cost of Living (2) is "bad."
Crime (0) is "good."

Boston:
Climate (3) is "bad."
Arts (4) is "good."
Recreation (5) is "good."
Cost of Living (0) is "good."
Crime (0) is "good."

Chicago:
Climate (4) is "good."
Arts (3) is "good."
Recreation (2) is "bad."
Cost of Living (2) is "bad."
Crime (2) is "bad."

Denver:
Climate (2) is "bad."
Arts (3) is "good."
Recreation (2) is "bad."
Cost of Living (0) is "good."
Crime (1) is "good."

Based on this model, Atlanta has the highest number of "good" features, and Chicago has the highest
number of "bad" features.

Therefore, Atlanta is the best alternative according to the Frequency of Good and Bad Features model.

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