1. Quantitative decisionQuantitative decision
makingmakingIntroductionIntroduction
Decision making is needed whenever an individual or anDecision making is needed whenever an individual or an
organization is faced with a situation of selecting an optimalorganization is faced with a situation of selecting an optimal
course of action among several available alternativescourse of action among several available alternatives
A business firm may have to decide the type of technique to beA business firm may have to decide the type of technique to be
used in production, which product firm should produce, what is theused in production, which product firm should produce, what is the
most appropriate method of advertising its product etc.most appropriate method of advertising its product etc.
Decision making is a process of choosing an optimal course ofDecision making is a process of choosing an optimal course of
action out of several alternative courses for the purpose ofaction out of several alternative courses for the purpose of
achieving a goals. Statistical decision theory consists of a largeachieving a goals. Statistical decision theory consists of a large
number of quantitative techniques which helps in analyzing anumber of quantitative techniques which helps in analyzing a
decision situation and enable us to assure at a conclusion which isdecision situation and enable us to assure at a conclusion which is
the best under given circumstances of the casethe best under given circumstances of the case

2. Elements of a decision problemElements of a decision problem
 ActsActs
 States of natureStates of nature
 Pay off tablePay off table
Decision making environmentsDecision making environments
decision making under conditions of certaintydecision making under conditions of certainty
Decision making under conditions of uncertaintyDecision making under conditions of uncertainty
Decision making under conditions of riskDecision making under conditions of risk

3. Decision criteriaDecision criteria
Decision making under uncertaintyDecision making under uncertainty
MaximinMaximin
MaximaxMaximax
Minimax regret criterionMinimax regret criterion
Laplace criterionLaplace criterion
Decision making under risksDecision making under risks
Expected monetary valueExpected monetary value
Expected opportunity lossExpected opportunity loss

4. OVER VIEWOVER VIEW
CorrelationCorrelation
RegressionRegression
Chi squareChi square
F test and analysis of varianceF test and analysis of variance