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home / study / math / statistics and probability / statistics and probability questions and answers / Question: Which Decision Is Preferred For The Objective Of Minimizing The Risk Or Uncertainty? ... Question: Question: Which decision is preferred for the objective of minimizing the risk or uncertainty? (P... (2 bookmarks) Question: Which decision is preferred for the objective of minimizing the risk or uncertainty? (Problem involves linking a business situation with a statistics problem utilizing mean and standard deviation with probabilities) I see the information for the Risk Analysis for Medium-Scale Expansion and Risk Analysis for Large-Scale Expansion on this page (http://www.chegg.com/homework-help/questions-and-answers/question-decision-preferred-objective-minimizing-risk-uncertainty-problem-involves-linking-q20047857) but i dont see how they got these numbers... can someone show the work?

Explanation / Answer

we find that in medium scale expansion and in large scale expansion: the strategy for medium demand shows the least variance

For medium level expansion it is 138.89

For large scale expansion it is 555.56

Thus this strategy that corresponds to medium demand is less risky because it corresponds to least variance in medium and well as large level expansion

138.89 comes from medium scale expansion in table 1

see column corresponding to medium

mean = (50+150+200)/3 = 133.333333

0.5 * (150 - 133.33333)^2 = 138.888944444

similarly

for 555.56 ,look in large scale

0.5*(133.33333-100)^2 = 544.5555.555444

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