THE IIS UNIVERSITY

PROJECT - QUANTITATIVE TECHNIQUES FOR MANAGEMENT

BBM-406

SUBMITTED TO :

Mrs. Roopam KothariSUBMITTED BY :

Aayushi Chhabra

Anushana SharmaDevika

ShekhawatGarvita Kapoor

Sheenu Saini

DECISION MAKING UNDER

UNCERTAINITY In this case, decision maker is unable to specify

the probabilities with which the various states

of nature will occur. Thus, the decisions under

uncertainity are taken with very less

information. (negative relationship with time)

1. Criteria of Optimism:• Maximum of Maximum

• Maxi Maxi

2. Criteria of Pessimism:• Maximum of Minimum

• Maxi Mini

CASE OF PROFIT MATRIX

Under this criterion it is assumed that the decision –maker is OPTIMISTIC by nature and he would always think that the state of nature would be the best from his point of view . The decision – maker chooses the strategy that makes the best of the best . Under this method first the maximum outcome within every alternative strategy is located and then the alternative with the maximum pay – off is selected.

MAXI – MAXI CRITERION

Under this criterion the decision – maker is assumed to be PESSIMIST by nature and he would always think that the worst would happen and would like to safeguard himself against this condition . Under this method first the minimum pay-off for each act is located and then the alternative which maximizes the minimum pay-off is selected . Thus the strategy which gives the highest minimum pay-off will be selected . Hence, a pessimist decision –maker would try to get the best out of the worst possible consequences.

MAXI – MINI CRITERION

HIGH PRICE

MODERATE HIGH PRICE

NEGLIGIBLE HIGH PRICE

S1 S2 S3

+ Sales N1 7,00,000 5,00,000 3,00,000

No Effect N2 3,00,000 4,50,000 3,00,000

-Sales N3 1,50,000 0 3,00,000

EXAMPLE:-

Maxi Maxi

7,00,000 5,00,000 3,00,000

Maxi Mini

1,50,000 0 3,00,000