Business Statistics

734 Business Statistics

A decision maker needs to select the best act (highest profit or lowest opportunity loss) for a given

event. From Table 19.4, a decision maker should select the act which results in the lowest opportunity

loss and is given as part of the diagonal elements of the table. This is possible when events are certain.

However in real life, events are not certain and the best method is to select an act with the highest

expected payoff or lowest expected opportunity loss.

After framing the payoff table, decisions have to be taken on the basis of several rules or crite-

rion. The decision situation, the attitude of the decision ...