ECONOMICS

Detailed explanation-1: -Decisions are made under the condition of certainty when the manager has perfect knowledge of all the information needed to make a decision. This condition is ideal for problem solving. The challenge is simply to study the alternatives and choose the best solution.

Detailed explanation-2: -Certainty: means that all the information the decision maker needs is fully available. However, few decisions are certain in the real world. Most contain risk or uncertainty.

Detailed explanation-3: -Examples of certainty include the need to meet customer, contract or regulatory requirements. The outcomes (consequences) are known to you, should you fail to comply.

Detailed explanation-4: -A newspaper vendor must decide how many copies to purchase each day in the face of uncertain demand, knowing that any unsold newspapers at the day’s end will be worthless. A naïve solution would be to take the average number of copies sold each day and purchase that many.

Detailed explanation-5: -Decision-Making Under Risk And Uncertainty. Making decisions under certainty is easy. The cause and effect are known, and the risk involved is minimal. What’s tough is making decisions under risk and uncertainty. The outcome is unpredictable because you don’t have all the information about the alternatives.