The problem facing the organization is to select the optimal strategy regarding development and marketing decision for Ski Right Helmets. The options presented in the scenario from with the organization can select the optimal are five (5) in number. First option is partnering with Progressive Products (PP) to develop the product and share profits evenly; second option is giving the contract the making and marketing to Leadville Barts (LB) and Progressive Products (PP); third option is a combination of TalRad (TR) and Progressive Products (PP) to make the product; fourth option is contracting the production and distribution to Celestial Cellular (CC) and Progressive Products (PP) while the final option is to combine Leadville Barts (LB), Celestial Cellular (CC) and TalRad (TR).
RECOMMENDATIONS
Using Maximum potential loss criterion the option recommended is strategy E which is the combination of Leadville Barts, TalRad and Celestial Cellular reason because it gives the maximum potential loss of -$49,047.62. For the optimist criterion, it is recommended that Ski Right should select option E Leadville Barts, TalRad and Celestial Cellular reason because it gives the maximum pay off return of $55,000 and so also using the pessimist criterion it recommended selecting option E Leadville Barts, TalRad and Celestial Cellular reason because it gives the maximum of all the minimum return of -$60,000. Using the opportunity loss result it is recommended that the company select strategy D which is a combination of Celestial Cellular and Progressive Products reason because it gives the best worst regret of $25,000. The expected value of perfect information for the above data is $15,300 using the expected value of regret table which recommends strategy B to be chosen by the organization.
DATA ANALYSIS OF THE RESULT AND DECISION
As we can see in the table 1.1 the expected money value of each strategy is shown from the analyzed data. The decision tree in Figure 1.0 also revealed the step by step workings that lead to selection of the optimal strategy. The optimal strategy is the strategy that gives the highest pay return. The expected money value is calculated multiplying the market chance for each option by the projected profit or loss return of each. Having analyzed the data, the result shows that decision 1 which is to partner with Progressive product will give EMV of $700; decision 2 which is to combine Leadville Barts and Progressive product which gives EMV of $2,600; decision 3 is combining TalRad with Progressive product and the result is EMV of $900; decision 4 Celestial Cellular with Progressive products gives EMV of $1,000 while the final option which is to combine Leadville Barts, TalRad and Celestial Cellular gives EMV of $2,500, select decision 2.
The maximum potential loss for each strategy from table 1.1 above is derived by using the formula αMax + (1-α) Min. Where α=2/ (n+1) = 0.0952. The maximum potential loses for the data analyzed are as follows: the result shows that decision 1 which is to partner with Progressive product will give MPL of -$4,047.62; decision 2 which is to combine Leadville Barts and Progressive product which gives MPL of -$7,904.76; decision 3 is combining TalRad with Progressive product and the result is MPL of -$12,333.33; decision 4 Celestial Cellular with Progressive products gives MPL of -$24,285.71 while the final option which is to combine Leadville Barts, TalRad and Celestial Cellular gives MPL of -$49,047.62, select decision 5.
The optimism of each strategy from table 1.1 above is derived from the table 1.0. The optimism for each data is the selection of the option with the highest payoff. The result shows that decision 1 which is to partner with Progressive product will give optimist result of $5,000; decision 2 which is to combine Leadville Barts and Progressive product which gives optimist result of $12,000; decision 3 is combining TalRad with Progressive product and the result is optimist of $13,000; decision 4 Celestial Cellular with Progressive products gives optimist result of $30,000 while the final option which is to combine Leadville Barts, TalRad and Celestial Cellular gives optimist result of $55,000, select decision 5.
The pessimism of each strategy from table 1.1 above is derived from the table 1.0. The pessimism for each data is the selection of the option with the lowest payoff. The result shows that decision 1 which is to partner with Progressive product will give pessimist result of -$5,000; decision 2 which is to combine Leadville Barts and Progressive product which gives pessimist result of -$10,000; decision 3 is combining TalRad with Progressive product and the result is pessimist of -$15,000; decision 4 Celestial Cellular with Progressive products gives pessimist result of -$30,000 while the final option which is to combine Leadville Barts, TalRad and Cellestial Cellular gives pessimist result of -$60,000, select decision 5.
The opportunity loss for the analyzed data is $25,000 and the Expected Value of perfect information which is the minimum expected regret is $15,300. From the details given, it is evidently clear that choosing option B which is to combine Leadville Barts and Progressive product will give the optimal decision strategy.
In conclusion, the selection of the best result is the primary aim of carrying out this several analysis and it is seen that option E or decision 5 provides the highest outcomes of all the possible events, Therefore the company is advised to pursue strategy E of all available option.
