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Perfect and Imperfect Knowledge

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Perfect and Imperfect Knowledge

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 19, 2021 at 11:09 am #638450
    Syed Ahsan Ali
    Member
    • Topics: 111
    • Replies: 69
    • ☆☆

    1) Perfect Knowledge is where we are guaranteed Best Outcomes based on market research.

    2) Imperfect Knowledge is where we are guaranteed Worst Outcomes at least based on market research.

    Perfect Knowledge = (Best Outcomes x Probabilities) – EV
    Imperfect Knowledge = (Worst Outcomes x Probabilities) – EV

    Please correct me if I am wrong?

    October 19, 2021 at 4:38 pm #638519
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    1. Perfect knowledge is where we are able to make the best decisions because we know in advance what the various outcomes will be.

    2. Imperfect knowledge is where we are able to make better decisions because we know the various outcomes with a higher probability.

    I work through examples of both perfect and imperfect knowledge in my free lectures on risk and uncertainty.

    Don’t try and learn PM as just a set of rules. The questions asked by the examiner are designed to test your understanding of the topics rather than to test whether you have learned rules.

    October 19, 2021 at 6:01 pm #638536
    Syed Ahsan Ali
    Member
    • Topics: 111
    • Replies: 69
    • ☆☆

    Sorry I realize what I wrote previously was wrong 🙁

    1) Perfect Knowledge is calculated using the Best Outcomes (ie best decision) on each demand level from Profit Table with the probabilities given to calculate EV with Perfect information;

    Demand———–400—–500—–700—–900
    Best Outcome—4400—4600—5000—-5400
    Probabilties——-0.2——0.3—–0.4——0.1
    EV——————880—–1380—2000—-540 = $4800

    2) Imperfect Knowledge = Perfect Knowledge – EV

    This is the way you have done your calculation in your lecture If I am not wrong!

    October 20, 2021 at 7:50 am #638566
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    Now you are correct 🙂

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