Multistage decision making based on one-shot decision theory

Abstract

In this paper, a multistage decision problem for minimizing the total cost with partially known information is considered. In each stage, a decision maker has one and only one chance to make a decision. The optimal decision in each stage is obtained based on the one-shot decision theory. That is, the decision maker chooses one of states of nature (scenario) of each alternative in every stage with considering the satisfaction of the outcome and its possibility. The selected state of nature is called the focus point. Based on the focus points, the decision maker determines the optimal alternative in each stage by dynamic programming problems. © 2011 Springer-Verlag Berlin Heidelberg.