Question
BBT is considering migrating their servers to a cloud service, upgrading their existing servers, or doing nothing. A payoff table (in $ millions) is provided
BBT is considering migrating their servers to a cloud service, upgrading their existing servers, or doing nothing. A payoff table (in $ millions) is provided in the accompanying spreadsheet. Using that table, answer the following questions:
- What is the EMV of each alternative? Based on this analysis, what is the best decision?
- Assume that the probabilities given are not reliable, then compute the criteria below and give the best decision for each.
- Maximin
- Maximax
- Equally likely (Laplace)
- Minimax regret
- Based on your analysis in 1 and 2, what do you recommend? Defend your answer!
| Poor Market | Average Market | Good Market | |
| Cloud | -5 | 21 | 29 |
| Upgrade Servers | 10 | 15 | 27 |
| Do nothing | 0 | -9 | -15 |
| 0.29 | 0.53 | 0.18 |
Provide the value of the criterion and the associated decision. For example, for #1, an answer could be Best EMV = 100; Decision = Do nothing.
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
First lets calculate the Expected Monetary Value EMV for each alternative EMVCloud 5 029 21 053 29 0...
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Introductory Statistics Exploring The World Through Data
Authors: Robert Gould, Colleen Ryan
2nd Edition
9780321978509, 321978277, 321978501, 978-0321978271
