Consider the decision tree'below. You are at the starting decision node DO (shown in the orange color). Assumeall paths and decisions occur within a 1-year time horizon, so that no discounting is necessary. There are dollarinvestments, as shown, required at decision nodes D1 and D2. Which of the letters (shown in the red color)represents the optimal path maximizing the expected outcome value?Value, $300.9D3Investment0.4100S-500.10.650DIS-80500900.1D1500$-8090Value $0.3150$-250.3-300.4750.5200D2 ES-30-0.5-100$-3550O a. AO b. BO c. CO d. DO e. EO f. F

Answered: Consider the decision tree'below. You…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Eunice, in The scenario, wants to determine how each of the 3 companies will decide onpossible new investments. He was able to determine the new investment pay off for eachof the three choices as well as the probability of the two types of market. If a company willlaunch product 1, it will gain 125,000 if the market is successful and lose 125,000 if themarket is a failure. If a company will launch product 2, it will gain 75,000 if the market issuccessful and lose 75,000 if the market will fail. If a company decides not to launch anyof the product, it will not be affected whether the market will succeed or fail. There is a53% probability that the market will succeed and 47% probability that the market will fail.What will be the companies decision based on EMV? What is the decision of eachcompany based on expected utility value?
Assume that the Wisconsin Cheese Factory currently operates a large facility in Madison, WI. The owner, however, is concerned about concentration of risk and has decided to open up two new facilities to lessen that concentration, one in St. Cloud, MN, and the other in Iowa City, IA. Total production, while slightly less profitable overall because of additional operational costs, remains the same, with 1/3 at each location. This action is an example of _______. profit maximization loss reduction loss prevention risk avoidance
There are 3 different fire alarm systems in the store. System A detects fire with a probabilityof 0.6 and costs $40, the B detects fire with a probability of 0.91 and costs $100, the Cdetects fire with a probability of 0.8 and costs $60. Which option is better: to set one systemB or two systems A and C?
Do the following problems using either TreePlan A student is deciding which scholarships (out of two) to accept. The first scholarship is worth $10,000 but carries the condition that recipients cannot accept another other forms of income (such as other scholarships). The second scholarship is awarded in a competition, where this student has a 50% chance of earning $7,000, a 40% chance of earning $10,000, and a 10% chance of earning $15,000. The student must inform the administrator of the first scholarship whether she will be accepting their offer today. A. Develop a decision tree to determine which scholarship this student should accept (using our normal decision criteria). B. Under what circumstance might the student accept the other scholarship?
For your next 10k race of the athletics season, you consider competing in either Sheffield, Cardiff, or Birmingham. After considering results from past years and the three different routes, you estimate your prize money, which will also depend on your form on the day. These estimated prizes are shown in the following table: Good form Average form Bad form 0 Sheffield 1000 Cardiff 700 Birmingham 800 400 500 600 200 100 Which condition must a satisfy such that Birmingham is the optimal city to go compete, according to the optimism-pessimism rule?
The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. Decision Alternative d₁ d₂ = EV(d₁) EV(d₂) The optimal decision is ? States of Nature $1 $2 230 80 $3 80 5 Suppose that the decision maker obtained the probabilities P(S₁) = 0.65, P(S₂) = 0.15, and P(S3) = 0.20. Use the expected value approach to determine the optimal decision. 80 55
PROBLEM SOLVING (DECISION THEORY) Example: A farmer wants to decide which of the three crops he should plant on his 100 Acre farm. The profit from each is dependent on the rainfall during the growing seasons. The farmer has categorized the amount of rainfall as high, medium, low. His estimated profit for each is show in the table: Rainfall Crop A Crop B Crop C High 8000 3500 5000 Medium 4500 4500 5000 Low 2000 5000 4000 Determine the various criterion from which the final decision has to be made. If the farmer wishes to plant only one crop, decide which will be his choice using the following criterion•Maximax criterion •Maximin criterion •Hurwicz criterion •Laplace criterion
A 36,000 square foot office building in Emeryville, California that was 88% leased had a 2023 annual net operating income estimated to be $1,880,000 with gross leases for all its tenants and a three level subterranean parking garage with 180 parking spaces. The 2024 NOI could be increased by all the following, EXCEPT: Increasing the operating expenses by adding additional maintenance staff Increasing the parking income by charging tenants for their employee parking Increasing the occupancy rate of the building by signing leases with new tenants Increasing the rental rates in new leases that are signed for the building
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Problem 2 Suppose that for years East Campus' short-run Phillips Curve was such that each 1 percentage point increase in its unemployment rate was associated with a 2-percentage point decline in its inflation rate. Then, during several recent years, the short-run pattern changed such that its inflation rate rose by 3 percentage points for every 1 percentage point drop in its unemployment rate. Graphically, did East Campus' Phillips Curve shift upward or did it shift downward?
9. The East Chester Tribune must decide whether to publish a Sunday edition. The publisher thinks the probability is 0.6 that a Sunday edition would be a success and 0.4 that it would be a failure. If it is a success, she will gain $100,000. If it is a failure, she will lose $80,000. a. Construct a decision tree corresponding to the problem, and use backward induction to solve the problem. (Assume that the publisher is risk-neutral.) b. List all forks in the decision tree you constructed; then indicate whether each is a decision fork or a chance fork and state why.
The below table shows a payoff matrix that represents the interaction between two friends, Amanda and Bernardo. They are deciding which city to visit together. Bernardo Inverness Perth Amanda Inverness 7, 4 2.5, 1 Perth 1, 2.5 3, 9 Select all the correct answers. Group of answer choices Amanda's preference is to visit Inverness If this is a sequential game and Bernardo can move first, Amanda's preference is to visit Perth. There are two Nash equilibria in this game If this is a one-shot, simultaneous game, then both players would choose Perth since it is the highest total payoff

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