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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.

Charlotte Kelly
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Decision Analysis and Optimization Using Expected Monetary Value (EMV) and OpportunityLoss Techniques(a)Here decision of optimal strategy is obtained through expected monetary value (EMV)technique.(b)The expected monetaryvalue (EMV)for each of the equipment is shown in the followingfigure.The decision of choosing the equipment “Sub 100” is optimizing the expected profit forKen. So Ken should purchase “Sub 100”.Equipment Favorable Market ($)Unfavorable Market ($)Expected Monetary ValueSub 100300,000-200,000175,000MaxOiler J265,000-96,000174,750Texas85,000-18,00059,250Probability0.750.25

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Business Management

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