Decision Modelling project report

Submitted by: Group 6Introduction

We are confused! We dont know which
project to take. Mapping an existing
problem in one of the solution might not
fit as real world problems are complex and

Raghunath. N. V
Abhijeet Rawat
Ketav patel
Nikhil Sharma
Chittiz Visharad

PGP15091
PGP15061
PGP15098
PGP15094
PGP15074

dynamic at the same time creating a problem from one of the methods might look unrealistic.
One thing is for sure; we need maximum marks in decision modelling project.
Now the problem is which decision methodology to work on which gives us maximum marks.
Methods such as linear programming are simple, transportation problems moderate whereas
game theory, tree diagram and simulation are complex and risky; and risky because if we miss
the logic, our marks could be lower than any normal LP model problem. If we want to maximize
our marks, we should concentrate on more risky problem but will it give us maximum marks for
sure? We dont know.
This is a strategic problem!
We can create a model through which we can analyze which kind of problem would possibly
gives us maximum marks. The concepts of game theory and tree diagram are best suited for this
to find out which problem gives more payoff!

Problem Statement: To find out which methodology to work on, which would give us
maximum marks in decision modelling project.

Modelling the problem Game theory formulation

Games that had been pastimes once have emerged as guiding tools in business, war and almost
all competitive activities, in the wake of their conceptualization. We here take an example of the
decision modelling assignment.
We have supposed that the assignment can be done by picking any one of the three types of
problems:
1. Linear programming problem
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2. Transportation problem
3. Problem on game theory and simulation
For each of these options there are three possibilities through which teacher might assume
the student has the following
1. Clear understanding of project + not so complex problem or
2. Project on Complex real time problem +not so clear students understanding of problem
3. Problem on Complex real time Problem + Clear Understanding of problem

Payoffs = marks
Logically, we know that marks are scarce resource. There will be a normal distribution (mostly
left skewed) through which marks were given.
Assuming
Problem
Linear Programming problem
Transportation problem
Decision Tree and Game theory
problem

Probability of students
picking a model

Professors assumption
Clear understanding of project + Not so
complex problem
Project on Complex real time problem +
Not so clear students understanding of
problem
Problem on Complex real time Problem +
Clear Understanding of problem

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60%
30%
10%

Probability
20%
20%
60%

With this, we have in total,

Multiplying above with payoffs will give us average score of class and with the average score,
we can calculate total marks available with the professor.

Average marks = sum of the table = 14.28 marks per 20 marks per student
There are 122 students in total and assuming our probabilities to be correct, the total marks with
the professor = 122 x 14.28 = 1742 marks.
Hence, gain of the student = loss of the professor and with this, game theory application for this
model can be proved.
If we dont have any probabilities, we might have taken the following options for project
selection

1. Optimistic Approach
a. Maximum payoff = {15, 17, 20} for LP, TP and DT & GP correspondingly
=> We might choose Decision tree and Game theory problem
2. Conservative approach
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a. Maximizing minimum payoff = {12, 8, 7} for LP, TP and DT & GP respectively

=> We might choose Linear programming problem
3. Minimax Regret approach

We might choose linear programming problem

From the above three choices, Optimistic approach would be the best choice as it is helping us
achieve our goal of maximum marks!

With probabilities of professor rating us, we can make a decision tree and find the possible
payoffs

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With the decision tree, we are getting maximum payoff by selecting a game theory and decision
tree problem.

In the above case, we have taken professors probable assumption on our project by giving
probabilities of {0.2, 0.2, 0.6}. But what if these are wrong and every option has equally likely
chance? In that case, above model may fail.
We would like to test it with a simulation by taking 1000 random variables

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Simulation output

Mean marks
Standard
deviation

GT &
LP
TP
DT
13.245 12.251 13.851
1.2324 3.7186 5.3363
67
02
66

In this model, we found that taking a goal theory and decision tree is giving higher payoff of 13.8
but has a standard deviation of 5.3 which means, chances of obtaining maximum marks is

GROUP 6

possible only with Goal theory and decision tree problems. We do understand the risk is high but
this is the only possible option we have to maximize our score.

Findings
Various theories suggested us different problem solving tool selection to maximize marks. They
are
Optimistic Approach Goal theory and Decision tree
Conservative approach Linear Programming
Minimax regret approach Linear Programming problem
Decision tree approach (with probabilities) Goal theory and Decision tree
Simulation approach (with equal probabilities) Goal theory and Decision tree
Now it is we who have to decide on which project to take.

Conclusion
We would work on Goal theory and Decision tree related problems as this option gives us high
marks. Though uncertainty is high (from standard deviation value), we still would go with this
problem, as we are optimists!
And so, we completed our project on Goal theory and Decision making.

GROUP 6