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Management Statistical Decision: Elements of a decision

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1. What are the elements of a decision? How does statistical decision theory differ in conditions of certainty and uncertainty? When making a decision, can doing nothing be a valid alternative? Why?

2. What skills do managers need today? Are these skills different from management skills of 50 years ago? Why?

3. In management, how important is it that you learn to use mathematics to solve problems? How valuable is an MBA degree without the ability to identify the cost of a company's capital, its return on investment, gross margin percentage, break-even point, or which percent of a population would be willing to buy its product?

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Solution Summary

The solution discusses a management statistical decision and the elements.

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1. Five elements of decision making:

? Problem rationalization
? Boundary conditions
? The right thing to do
? Action
? Feedback

Decision theory under certainty means that each alternative lead to one and only one consequence and a choice among alternatives is equivalent to choice among consequences. Decision theory under uncertainty is spoken of when probability distributions are unknown. The decision theory for this case offers two main approaches-the first exploits criteria of choice developed in a broader context by game theory where we use choose the alternative such that the worst possible ...

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