The diretor of career advising at Orange community College wants to se decision

Question

The diretor of career advising at Orange community College wants to se decision analysis to provide info to helpstudents decide which 2 year degree program they should pursue. The director has set up the fowllowing payoff table for 6 of the most popular and successful degree programs at OCC that shows the estimated 5 year gross income ($) fronm each degree for 4 future economic conditions.

degree program                                  economic conditions

                                                recession               average               good                robust

graphic designe                         150,000                 175,000                220,000             200,000

nursing                                      160,000                  180,000               205,000              215,000

real estate                                  125,000                  165,000                220,000             210,000

medical technology                      135,000                   180,000               210,000             270,000

culinary                                        110,000                 145,000                 235,000             205,000

computer information                      130,000                150,000                  190,000            245,000

Determine the best degree program in terms of projected income, using the following decision criteria:

a. Maximax

b. Maximin

c. Equal likelihood

d. Hurwicz (a=0.4)

Explanation / Answer

Answer: Economic Conditions Degree Program Recession Average Good Robust Best Least Equal likely payoff Payoff by using Hurwitz criterion Graphic design 150,000 175,000 220,000 200,000 220,000 150,000 186250 328000 Nursing 160,000 180,000 205,000 215,000 215,000 160,000 190000 336000 Real estate 125,000 165,000 220,000 210,000 220,000 125,000 180000 313000 Medical technology 135,000 180,000 210,000 270,000 270,000 135,000 198750 345000 Culinary technology 110,000 145,000 235,000 205,000 235,000 110,000 173750 300000 Computer information technology 130,000 150,000 190,000 245,000 245,000 130,000 178750 312000 1 Maximax = 270,000 it maximizes the maximum payoff. 2 Maximin = 160,000 it maximizes the minimum payoff 3 For equal likelihood the probabilities are assigned equally to all decision criterion. Here we are assigning the probabilities as 0.25 to each state of outcome. So the equal likely payoff is maximum of all which is equal to = 198750 4 Here the Hurwitz criterion is 0.4 this means it is coeffitient of optimism so the coeffitient of pessimism = 1 - 0.4 = 0.6 No we will calculate the payoff for each decision criterion. So the payoff from Hurwitz criterion is = max of all payoffs = 345000

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