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Hale's Productions is considering producing a pilot for a comedy series in the hope of selling it to a major streaming service. The streaming service may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the streaming service's decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: State of Nature Decision Alternative Reject, $1 1 Year, S₂ 2 Years, 53 Produce pilot, d₁ -100 50 150 Sell to competitor, d₂ 100 100 100 The probabilities for the states of nature are P(s₁) = 0.1947, P(s2) = 0.3141, and P(53) = 0.4912. For a consulting fee of $5,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable streaming service reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review and that the following probabilities are relevant. P(F) = 0.69 P(U) = 0.31 P(S₁|F) = 0.08 P(s₂IF) = 0.28 P(S3|F) = 0.64 P(s₁IU) = 0.45 P(52) = 0.39 Pls U)-0.16 (a) Construct a decision tree for this problem. (Enter your answers in thousands of dollars.) Decision Tree Description Agency 2 1 51 d1 $2 6 $3 F 3 $1 d2 52 7 $3 U 4 51 d₁ 52 8 53 $1 d2 52 9 $3 $1 d1 52 10 $3 No Agency 5 $1 d2 52 11 53

Hale's Productions is considering producing a pilot for a comedy series in the hope of selling it to a major streaming service. The streaming service may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the streaming service's decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: State of Nature Decision Alternative Reject, $1 1 Year, S₂ 2 Years, 53 Produce pilot, d₁ -100 50 150 Sell to competitor, d₂ 100 100 100 The probabilities for the states of nature are P(s₁) = 0.1947, P(s2) = 0.3141, and P(53) = 0.4912. For a consulting fee of $5,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable streaming service reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review and that the following probabilities are relevant. P(F) = 0.69 P(U) = 0.31 P(S₁|F) = 0.08 P(s₂IF) = 0.28 P(S3|F) = 0.64 P(s₁IU) = 0.45 P(52) = 0.39 Pls U)-0.16 (a) Construct a decision tree for this problem. (Enter your answers in thousands of dollars.) Decision Tree Description Agency 2 1 51 d1 $2 6 $3 F 3 $1 d2 52 7 $3 U 4 51 d₁ 52 8 53 $1 d2 52 9 $3 $1 d1 52 10 $3 No Agency 5 $1 d2 52 11 53

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 36P
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Hale's Productions is considering producing a pilot for a comedy series in the hope of selling it to a major streaming service. The streaming service may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the streaming service's decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: State of Nature Decision Alternative Reject, $1 1 Year, S₂ 2 Years, 53 Produce pilot, d₁ -100 50 150 Sell to competitor, d₂ 100 100 100 The probabilities for the states of nature are P(s₁) = 0.1947, P(s2) = 0.3141, and P(53) = 0.4912. For a consulting fee of $5,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable streaming service reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review and that the following probabilities are relevant. P(F) = 0.69 P(U) = 0.31 P(S₁|F) = 0.08 P(s₂IF) = 0.28 P(S3|F) = 0.64 P(s₁IU) = 0.45 P(52) = 0.39 Pls U)-0.16
Transcribed Image Text:Hale's Productions is considering producing a pilot for a comedy series in the hope of selling it to a major streaming service. The streaming service may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the streaming service's decision or transfer the rights for the pilot and series to a competitor for $100,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: State of Nature Decision Alternative Reject, $1 1 Year, S₂ 2 Years, 53 Produce pilot, d₁ -100 50 150 Sell to competitor, d₂ 100 100 100 The probabilities for the states of nature are P(s₁) = 0.1947, P(s2) = 0.3141, and P(53) = 0.4912. For a consulting fee of $5,000, an agency will review the plans for the comedy series and indicate the overall chances of a favorable streaming service reaction to the series. Assume that the agency review will result in a favorable (F) or an unfavorable (U) review and that the following probabilities are relevant. P(F) = 0.69 P(U) = 0.31 P(S₁|F) = 0.08 P(s₂IF) = 0.28 P(S3|F) = 0.64 P(s₁IU) = 0.45 P(52) = 0.39 Pls U)-0.16
(a) Construct a decision tree for this problem. (Enter your answers in thousands of dollars.) Decision Tree Description Agency 2 1 51 d1 $2 6 $3 F 3 $1 d2 52 7 $3 U 4 51 d₁ 52 8 53 $1 d2 52 9 $3 $1 d1 52 10 $3 No Agency 5 $1 d2 52 11 53
Transcribed Image Text:(a) Construct a decision tree for this problem. (Enter your answers in thousands of dollars.) Decision Tree Description Agency 2 1 51 d1 $2 6 $3 F 3 $1 d2 52 7 $3 U 4 51 d₁ 52 8 53 $1 d2 52 9 $3 $1 d1 52 10 $3 No Agency 5 $1 d2 52 11 53
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