Decision Making in Optimizing a Product of a Small Scale Industry: A Bayesian Analysis Approach

Abstract

This paper intends to find Expected monetary value (EMV), Expected opportunity loss (EOL) and conditional profit of the main product (Mukta) of a small scale industry–“ORGAMAN” situated at Jorhat District of Assam. To meet the above specific objectives, the method of Bayesian Analysis has been adopted. The data used in this endeavor is secondary in nature, collected by direct personal investigation. As per prior information, the target of the industry is to produce a minimum of 50 MT (low production) of product and a maximum of 350 MT (high production) of the same per month. The prior analysis reveals that the expected monetary value and expected opportunity loss are optimum against high production. Based on both the prior analysis and posterior analysis, it is observed that the profit for the product of the industry is maximum against high production of 350 MT per month. Although, the profit based on posterior analysis is slightly high, it seems that the additional amount of money has to be spend to collect additional information for posterior analysis