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(a) Describe the steps involved in the process of decision making under uncertainty.
(b) Explain the following principles of decision making:
(i) Laplace,(ii) Hurwicz.
(c) Mr Ryan wants a set of buttons sewn on his jacket, but is uncertain whether he wants black, white, gold, silver, green or violet buttons. A tailor will sew on a set of black buttons for Rs8, a white set for Rs10, a gold set for Rs11, a silver set for Rs9, a green set for Rs6 and a violet set for Rs7. If Mr Ryan changes his mind, then the tailor offers to replace only once whichever selected set for an additional charge of Rs4.
(i) Construct the pay-off table which shows the price Mr Ryan will pay for the buttons depending on whether he keeps the set of buttons or replaces it with another one.
(ii) Which set of buttons will Mr Ryan order if he applies Laplace and Hurwicz [take =0:6] criteria respectively?
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1. Start 2. Get h 3. If h T=288.15+(h*-0.0065) 4. else if h T=216.65 5. else if h T=216.65+(h*0.001) 6. else if h T=228.65+(h*0.0028) 7. else if h T=270.65 8.
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