1. Using internet, literature or any other source of information, take any business situation you are interested in and design your own decision problem. It must be not trivial but not too complex and involve uncertain events. It must be reasonably motivated and applicable to a business area, say, business analysis, investment, production, etc.
2. Your decision problem must have two types of probabilities. One type presents probabilities that can be obtained directly or calculated by using statistical data from any source you like (e.g., Australian Bureau of Statistics). The other type presents probabilities that are not known and cannot be obtained directly or calculated by using statistical data. Use the Monte Carlo simulation method to estimate these probabilities. You can choose either Excel or Palisade Decision Tool for this purpose.
3. Build a decision tree, necessary spreadsheet models and find a solution to your problem by using this tree and the models.
4. Describe in your words an optimal strategy that solves your problem. Perform sensitivity analysis providing a tornado diagram and other graphs only if it is necessary.
5. The result of the assignment must be presented by one Excel spreadsheet (where you can have more than one worksheet) carrying your models and one MS Word document presenting your report with the description of the problem, motivations and a solution.
6. Please use the font ???Verdana??? of size 10 for the body text and size 12 with bold formatting for the headings to prepare the report. You can also italicize key words only.
7. Start performing the assignment on a careful reading of the instructions in the file ???ECMT2630-Sem1-2011-Assignment-2-Instruction.docx.???
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