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Decision Theory and Introduction to Quantitative Methods

7.1 INTRODUCTION TO DECISION ANALYSIS

Everyday we make decisions and occasionally we make an important decision that can have immediate and/or long-term effects on our lives. Decisions like where to attend school, whether to rent or buy, whether your company should accept a merger proposal, whether to run a cool drink stall or a snacks stall and so on, are important decision—for which we would prefer to make the correct choice. A decision, in general, may be defined as the selection by the decision-maker of an act, considered to be best according to some predestinated standard, from among the several options.

7.1.1 Steps in Decision Theory Approach

Step 1: Determine the various alternative ...

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