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Decision Analysis and Optimization Using Expected Monetary Value (EMV) and Opportunity Loss Techniques

Study on decision analysis methods using EMV and opportunity loss.

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    Decision Analysis and Optimization Using Expected Monetary Value (EMV) and Opportunity Loss Techniques (a) Here decision of optimal strategy is obtained through expected monetary value ( EMV ) technique. (b) The expected monetary value ( EMV ) for each of the equipment is shown in the following figure. The decision of choosing the equipment “Sub 100” is optimizing the expected profit for Ken. So Ken should purchase “Sub 100”. Equipment Favorable Market ($) Unfavorable Market ($) Expected Monetary Value Sub 100 300,000 -200,000 175,000 Max Oiler J 265,000 -96,000 174,750 Texas 85,000 -18,000 59,250 Probability 0.75 0.25

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