PART B : DECISION MAKING UNDER RISK
	EMV :- EXPECTED MONETARY VALUE
		or EXPECTED PAY OFF
	VVV IMP
	EX 1 FIND THE OPTIMAL DECISION BY EMV CRITERIA
	PAY OFF MATRIX
	Course of Action	State of Nature
	Alternative	S1	S2	S3
	A1	25	85	95
	A2	40	0	60
	A3	65	30	55
	Probability	0.3	0.5	0.2	1
	SOLUTION
		EXPECTED PAY OFF MATRIX
	Course of Action	State of Nature
	Alternative	S1	S2	S3	EMV
	A1	7.5	42.5	19	69
	A2	12	0	12	24
	A3	19.5	15	11	45.5
					MAX = 69
	OPTIMAL DECISION IS TO CHOOSE ALTERNATIVE A1 BY EMV CRITERIA
	EX 2	FIND THE BEST DECISION BY EMV METHOD
			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
						MAX =87.6
	BEST DECISION IS TO SELECT ALTERNATIVE A2 BY EMV METHOD
	EX 3	FIND THE OPTIMAL/BEST DECISION BY EMV CRITERIA
			PAY OFF MATRIX
	Course of Action	State of Nature/Events
	Altenative	S1	S2	S3	S4
	A1	25	30	150	80
	A2	45	120	50	130
	A3	60	100	0	-10
	A4	40	60	65	25
	PROBABILITY	0.2	0.2	0.1	0.5
			EXPECTED	PAY OFF	TABLE
	Course of Action	State of Nature/Events
	Altenative	S1	S2	S3	S4	EMV
	A1	5	6	15	40	66
	A2	9	24	5	65	103
	A3	12	20	0	-5	27
	A4	8	12	6.5	12.5	39
						MAX = 103
	OPTIMAL DECISION IS TO SELECT ALTERNATIVE A2 BY EMV CRITERIA
	Ex 4 :  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
					MAX = 245
	BEST DECISION IS TO CHOOSE ALTERNATIVE A3 BY EMV CRITERIA
	DIV C & D
	ASSIGNMENT 3
	PAGE NO 302
	EXERCISE
	PROBLEMS 6 TO 11
	ASSIGNMENT 4
	PAGE NO 316
	EXERCISE
	PROBLEMS 15 TO 20 YOU ALL TRY EMV
	EOL : EXPECTED OPPURTUNITY LOSS
	Ex : For the following conditional pay-off table , select best decision using EOL criteria
		PAY	OFF	MATRIX
		EVENTS
	ALTERNATIVES	E1	E2	E3
	A1	80	60	110
	A2	40	0	50
	A3	100	-20	70
	PROB	0.3	0.2	0.5
	STEP 1
		REGRET MATRIX
			EVENTS
	ALTERNATIVES	E1	E2	E3
	A1	20	0	0
	A2	60	60	60
	A3	0	80	30
	PROB	0.3	0.2	0.5
	STEP 2
		EXPECTED OPPORTUNITY LOSS TABLE
			EVENTS
	ALTERNATIVES	E1	E2	E3	EOL
	A1	6	0	0	6
	A2	18	12	30	60
	A3	0	16	15	31
					MIN = 6
	BEST DECISION IS TO CHOOSE ALTERNATIVE A1 BY EOL CRITERIA
	Ex 2 : For the following conditional pay-off table , select best decision using EOL criteria
		PAY OFF MATRIX
			EVENTS
	ALTERNATIVES	S1	S2	S3	S4
	A1	100	300	150	400
	A2	0	50	30	-10
	A3	120	160	200	140
	A4	-100	0	500	300
	PROB	0.3	0.2	0.4	0.1
	STEP 1	REGRET MATRIX
			EVENTS
	ALTERNATIVES	S1	S2	S3	S4
	A1	20	0	350	0
	A2	120	250	470	410
	A3	0	140	300	260
	A4	220	300	0	100
	PROB	0.3	0.2	0.4	0.1
	STEP 2	EXPECTED OPPORTUNITY LOSS MATRIX
	ALTERNATIVES	S1	S2	S3	S4	EOL
	A1	6	0	140	0	146
	A2	36	50	188	41	278
	A3	0	28	120	26	174
	A4	66	60	0	10	130
						MIN = 130
	BEST DECISION IS TO CHOOSE ALTERNATIVE A4 BY EOL CRITERIA
			FIND THE BEST DECISION USING  EXPECTED MONETARY VALUE CRITERIA
		PAY OFF MATRIX
			EVENTS
	ALTERNATIVES	S1	S2	S3	S4
	A1	100	300	150	400
	A2	0	50	30	-10
	A3	120	160	200	140
	A4	-100	0	500	300
	PROB	0.3	0.2	0.4	0.1
		EXPECTED MONETARY VALUE MATRIX
	ALTERNATIVES	S1	S2	S3	S4	EMV
	A1	30	60	60	40	190
	A2	0	10	12	-1	21
	A3	36	32	80	14	162
	A4	-30	0	200	30	200
						MAX = 200
	BEST DECISION IS TO CHOOSE A4 BY EMV CRITERIA
	Ex 3: For the following conditional pay-off table , select best decision using EOL criteria
			EVENTS
	ALTERNATIVES	E1	E2	E3
	A1	25	400	650
	A2	-125	400	750
	A3	-10	440	740
	PROB	0.5	0.4	0.1
	STEP 1	REGRET TABLE
			EVENTS
	ALTERNATIVES	E1	E2	E3
	A1	0	40	100
	A2	150	40	0
	A3	35	0	10
	PROB	0.5	0.4	0.1
	STEP 2	EXPECTED OPPORTUNITY LOSS MATRIX
			EVENTS
	ALTERNATIVES	E1	E2	E3	EOL
	A1	0	16	10	26
	A2	75	16	0	91
	A3	17.5	0	1	18.5
					Min = 18.5
	BEST DECISION IS TO CHOOSE Alternative A3 BY EOL CRITERIA
	Ex 4: For the following conditional pay-off table , select best decision using EMV & EOL criteria
	ALTERNATIVES	S1	S2	S3
	A1	50	70	100
	A2	30	50	20
	A3	120	90	130
	A4	80	110	60
	PROB	0.3	0.5	0.2
	SOLUTION
		EXPECTED PAY OFF TABLE
	ALTERNATIVES	S1	S2	S3	EMV
	A1	15	35	20	70
	A2	9	25	4	38
	A3	36	45	26	107
	A4	24	55	12	91
					MAX = 107
	BEST DECISION IS TO SELECT A3 USING EMV CRITERIA
		pay-off table
	ALTERNATIVES	S1	S2	S3
	A1	50	70	100
	A2	30	50	20
	A3	120	90	130
	A4	80	110	60
	PROB	0.3	0.5	0.2
	REGRET TABLE
	ALTERNATIVES	S1	S2	S3
	A1	70	40	30
	A2	90	60	110
	A3	0	20	0
	A4	40	0	70
	PROB	0.3	0.5	0.2
	Opportunity Loss Matrix
	ALTERNATIVES	S1	S2	S3	EOL
	A1	21	20	6	48
	A2	27	30	22	79
	A3	0	10	0	10
	A4	12	0	14	26
					MIN = 10
	BEST DECISION IS TO SELECT A3 USING EOL CRITERIA
	Ex 4: For the following conditional pay-off table , select best decision using EMV & EOL criteria
	ALTERNATIVES	S1	S2	S3
	A1	-10	40	50
	A2	40	20	40
	A3	20	30	60
	PROB	0.3	0.5	0.2
		EXPECTED MONETARY VALUE MATRIX
	ALTERNATIVES	S1	S2	S3	EMV
	A1	-3	20	10	27
	A2	12	10	8	30
	A3	6	15	12	33
					MAX =33
	BEST DECISION IS TO SELECT A3 USING EMV CRITERIA
		REGRET TABLE
	ALTERNATIVES	S1	S2	S3
	A1	50	0	10
	A2	0	20	20
	A3	20	10	0
	PROB	0.3	0.5	0.2
		EOL TABLE
	ALTERNATIVES	S1	S2	S3	EOL
	A1	15	0	2	17
	A2	0	10	4	14
	A3	6	5	0	11
	PROB	0.3	0.5	0.2	MIN =11
	BEST DECISION IS TO SELECT A3 USING EOL CRITERIA