What are States of Nature?

States of Nature : These are all possible events which are beyond the control of decision maker and these determine the level of success for given act. These events are often called as states of nature. It is assumed that these are mutually exclusive and collectively exhaustive. In general states of nature are denoted by s1, s2, s3, …, sm etc.

(1)     S1 : There will be demand of 1000 units of certain product

S2 : Demand will be more than 2000 units.

(2)     S1 : There will be heavy rain fall in the month of June.

S2 : There will be moderate rain fall in the month of June.

S3 : There will be very less rain fall in the month of June.