You realise that the value of the Masters will depend on the grade you get on the course. You set out the values depending on whether your grade is High, Average or Low on this table below. For example, the value of Uni 1 if you finish with a high grade is 100 in your opinion but if you come out with a low grade it will only have a value of 10.
High Grade
Average Grade
Low Grade
Uni 1
100
60
10
Uni 2
90
70
30
Uni 3
70
50
40
Use the Maximax, Maximin, Hurwicz and Savage Criteria to see which option would be the best one using each criteria separately. Explain your workings
Question 3
You then try to calculate the probability of getting these grades. They are shown in the table below. For example, you consider that you have a 20% chance of getting a high grade in Uni 1.
High Grade
Average Grade
Low Grade
Uni 1
20%
40%
40%
Uni 2
30%
40%
30%
Uni 3
50%
30%
20%
Draw a decision tree using these probabilities and the values in Question 2 to decide which of the three options would be the best one. If you prefer you can draw it on paper and insert the picture here.
Question 4
You are worried that the probability of getting a high grade may not be correctly estimated. Do a Sensitivity Analysis on this probability to see if your decision would change if the probability of getting a high grade were either lower or higher.
The Makeup assesses the following learning outcomes:
· Outcome 1: Understand the the use of frameworks to support decision making
· Outcome 2: Be able to apply these frameworks correctly
· Outcome 3: Be able to use qualitative and quantitative information to take appropriate decisions