2. A decision tree is provided.DevelopProductSell IdeaLease for RoyaltyShow Transcribed TextProduce &MarketSell IdeaCompany ACompany BA. Calculate Expected value (EV) at every node. Show work.B. What is the optimum decision and EV?C. If your risk tolerance is $0, what is the best decision and EV?(.5) Large Market(.5) Low Mkt.(.5) Large Market(.5) Low Mkt.(.5) Large Market(.5) Low Mkt.(.5) Large Market(.5) Low Mkt.Payoff(S millions)5.0-3.03.001.81.06.0-1.01.0

To calculate the expected value we need to multiply the payoff and probability.if it split into two…

Answered: 2. A decision tree is provided. Develop…

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars).The state-of-nature probabilities are P(s1) = .35, P(s2) = .35, and P(s3) =30.a. Use a decision tree to recommend a decision.b. Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand.c. A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditionalprobabilities are as follows: P(F | s1)= .10 P(U | s1) = .90 P(F | s2) = .40 P(U | s2) = .60 P(F | s3) = .60 P(U | s3) = .40 What is the probability that the market research report will be favorable?d. What is Gorman’s optimal decision strategy?e. What is the expected value of the market…
24. A company is analyzing the makeup of its employees based on gender and education level. The expected value in the shaded cell of the two-way contingency table is ________. 30.6 20.4 29.4 19.6
The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upon the demand for the product. The following payoff table shows the projected profit (in thousands of dollars). The state-of-nature probabilities are P(s1) = .35, P(s2) = .35, and P(s3) = .30. a. Use a decision tree to recommend a decision.b. Use EVPI to determine whether Gorman should attempt to obtain abetter estimate of demand.c. A test market study of the potential demand for the product is expectedto report either a favorable (F) or unfavorable (U) condition. The relevantconditional probabilities are as follows: P(F | s1) = .10 P(U | s1) =.90 P(F | s2) = .40 P(U | s2) =.60 P(F | s3) = .60 P( U | s3) = .40 What is the probability that the market research report will be favorable?d. What is Gorman's optimal decision strategy?e. What is the expected value of the market research…
The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature: State of Nature Decision Alternative S1 S2 S3 d1 250 100 25 d2 100 100 75 1) Construct a decision tree for this problem. 2) If the decision maker knows nothing about the probabilities of the three states of nature, what is the recommended decision using the optimistic, conservative, and minimax regret approaches?
Which tool uses chance event outcomes, resource costs, and expected values to identify a strategy most likely to reach an objective? a. box and wisker plot b. decision tree c. dot plot d. histogram

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