PART  C : DECISION TREE
EMV :- EXPECTED MONETARY VALUE 
or EXPECTED PAY OFF 
vvvvvv imP
EX 1 FOR THE FOLLOWING  PAYOFF MATRIX FIND THE OPTIMAL DECISION USING DECISION TREE ( USE EMV METHOD)
PAY OFF MATRIX
Course of Action State of Nature
Alternative S1 S2 S3
A1 30 70 80
A2 50 0 40
A3 40 30 60
Probability 0.3 0.5 0.2 1
EXPECTED PAY OFF MATRIX        
Course of Action State of Nature        
Alternative S1 S2 S3 EMV        
A1 9 35 16 60        
A2 15 0 8 23        
A3 12 15 12 39        
 
EMV (A1) = 30*0.3+70*0.5+80*0.2 =9+35+16=60  
EMV (A2) = 50*0.3+0*0.5+40*0.2 = 15+0+8 = 23  
EMV (A3) = 40*0.3+30*0.5+ 60*0.2 = 12+15+12 =39  
OPTIMAL DECISION IS TO CHOOSE A1 BY EMV CRITERIA USING DECISION TREE
EX 2 FIND THE BEST DECISION USING DECISION TREE BY EMV CRITERIA
PAY OFF MATRIX
Course of Action State of Nature  
Alternative S1 S2 S3 S4
A1 35 100 38 75
A2 58 95 105 55
A3 45 30 91 100
PROB 0.2 0.3 0.4 0.1
SOLUTION
EXPECTED PAY OFF TABLE 
Course of Action State of Nature  
Alternative S1 S2 S3 S4 EMV                                  
A1 7 30 15.2 7.5 59.7                                  
A2 11.6 28.5 42 5.5 87.6                                  
A3 9 9 36.4 10 64.4                                  
                                           
blob:https://web.whatsapp.com/b2b679d6-f9e2-436b-ab48-2c543b26bb6a,blob:https://web.whatsapp.com/b2b679d6-f9e2-436b-ab48-2c543b26bb6a,blob:https://web.whatsapp.com/b2b679d6-f9e2-436b-ab48-2c543b26bb6a,blob:https://web.whatsapp.com/b2b679d6-f9e2-436b-ab48-2c543b26bb6a,blob:https://web.whatsapp.com/fdb4d34e-3424-402e-b1e4-315a434c9c04,blob:https://web.whatsapp.com/fdb4d34e-3424-402e-b1e4-315a434c9c04
EMV (A1) = 35*0.2+ 100*0.3+ 38*0.2 =7+ 30+ 15.2+ 7.5 = 59.7
EMV (A2) =  11.6 + 28.5 + 42 +5.5 = 87.5
blob:https://web.whatsapp.com/b2b679d6-f9e2-436b-ab48-2c543b26bb6a
EMV (A3) = 9 + 9 +36.4 + 10 + 64.4
BEST DECISION IS TO SELECT A2 BY EMV CRITERIA USING DECISION TREE
Ex 3 :  FIND THE BEST DECISION USING EMV CRITERION
  PAY OFF MATRIX    
EVENTS A1 A2 A3 PROB
E1 25 -125 -10 0.5    
E2 400 400 440 0.4    
E3 650 750 740 0.1    
           
           
  PAY OFF MATRIX  
       
    EVENTS  
ALTERNATIVES E1 E2 E3
A1 25 400 650
A2 -125 400 750
A3 -10 440 740
PROB 0.5 0.4 0.1
  EXPECTED PAY OFF TABLE   
EVENTS E1 E2 E3 EMV
A1 12.5 160 65 237.5
A2 -62.5 160 75 172.5
A3 -5 176 74 245
 
blob:https://web.whatsapp.com/b54a2b54-5299-4119-a452-7802cfe9677b
EMV (A1) = 12.5 + 160 + 65 = 237.5
EMV (A2) =  -62.5+ 160 + 75 = 172.5
blob:https://web.whatsapp.com/b2b679d6-f9e2-436b-ab48-2c543b26bb6a
EMV (A3) = -5 +176 +74 = 245
BEST DECISION IS TO SELECT A3 BY EMV CRITERIA USING DECISION TREE