BDU Co.

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April 5, 2023 at 5:06 pm #682247
VikasK
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Sir this is a question from B.P.P Kit.

Which two of the following, used by BDU Co, reduce uncertainty in decision-making?.

a) Expected Value Analysis
b) Market Research
c) Focus Group
d) Relevant Costing.

The right answer is option b and c, though no explanation has been provided.
But i believe they are right because Uncertainty exists when we cannot assign probabilities. And expected value uses probabilities so its not a right option and relevant costing as an option is irrelevant

So sir my question is as Maximax, MaxiMin, MiniMax Regret Rule, Sensitivity Analysis, Market Research do not take into consideration the probabilities

Can we say that they help in dealing with Uncertainty rather than Risk (Based upon the definition of Risk and Uncertainty)?
April 6, 2023 at 9:33 am #682269
John Moffat
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Not really.

The question asks which of the items reduce the uncertainty. There is always uncertainty whether or not we have probabilities. Market research and focus groups allow us to be a bit more certain as to what the outcome is likely to be.
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