How is EMV calculated for these steps. What is the probability and impact in these questions. 1) Should you play at all? (5%) If you play, what is your expected (net) monetary value? (15%) 2) If you play and don't win at all on the first try (but don't lose money), should you try again? (5%) Why? (10%) 3) Clearly show the decision tree (40%) and expected net monetary value at each node (25%) If you send in your entry before midnight tonight, then here are your chances: 0.1% that you win $1,000,000 75% that you win nothing Otherwise, you must PAY $1,000 But wait, there's more! If you don't win the million AND you don't have to pay on your first attempt, then you can choose to play one more time. If you choose to play again, then here are your chances: 2% that you win $100,000 20% that you win $500 Otherwise, you must PAY $2,000

How is EMV calculated for these steps. What is the probability and impact in these questions. 1) Should you play at all? (5%) If you play, what is your expected (net) monetary value? (15%) 2) If you play and don't win at all on the first try (but don't lose money), should you try again? (5%) Why? (10%) 3) Clearly show the decision tree (40%) and expected net monetary value at each node (25%) If you send in your entry before midnight tonight, then here are your chances: 0.1% that you win $1,000,000 75% that you win nothing Otherwise, you must PAY $1,000 But wait, there's more! If you don't win the million AND you don't have to pay on your first attempt, then you can choose to play one more time. If you choose to play again, then here are your chances: 2% that you win $100,000 20% that you win $500 Otherwise, you must PAY $2,000

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section9.2: Elements Of Decision Analysis

Problem 2P

See similar textbooks

Similar questions

Construct a decision tree and answer the following questions: What is the EMV of each decision alternative? Which action should be selected? What is the expected value with perfect information? What is the expected value of perfect information?
Eloise runs a small business called GraphX, which creates one-of-a-kind holographic stickers for well-known rock bands. Currently, Eloise is glad that none of her competitors have figured out how to mimic her way of creating holographic effects. Eloise currently has a _____________ that she hopes is ___________. A.Competitive advantage; sustainable B.Profit model; strategic C.Tactical plan; ethical D.Strategic plan; semi-permanent E.Competitive advantage; innovative F.Profit model; innovative
Come up with a decision using each of the different criteria under conditions of uncertainty using the table below. The payoff values are expressed as LOSSES.
Come up with a decision using MINIMAX REGRET CRITERION under conditions of uncertainty using the table below. The payoff values are expressed as LOSSES.Which decision alternative has the minimum payoff value of the maximum regret? Choices: -> A,B,C-> C,D,E-> E,F,G-> B,F,G-> C,G,F
Decision Tree Analysis. You are considering the decision to purchase a machine for internal production or to subcontract the work to an external source. The following information has been provided by your financial managers: Cost to purchase the machine—$35,000 Cost to subcontract the work—$5,000 Probability of a good market = 70% Probability of a poor market = 30% Reward if the prediction occurs: In the purchase machine decision good market scenario—$80,000; in the poor market scenario—$30,000 In the Subcontract decision good market scenario—$50,000; in the poor market scenario—$15,000 1. What is the expected value of the decision to purchase the machine?
Exhibit 20-2Below is a payoff table involving three states of nature and two decision alternatives. Decision States of Nature Alternative s1 s2 s3 A 80 45 –20 B 40 50 15 P(s1) = .1, P(s2) = .6, and P(s3) = .3.Refer to Exhibit 20-2. The expected value of the best alternative equals _____. a. 12 b. 38.5 c. 29 d. 105
What is the final value of the decision tree?
Answer A.2 a-e a-c is in the picture here is d and e d) What is the qually likely decision? e) Develop a decision tree. Assume each outcome is equally likely, then find the highest EMV.
Your company must decide whether to introduce a new product. The sales of the product will be either at a high (success) or low (failure) level. The conditional value for this decision is as follows Decision High Low Introduce $4,000,000 -$2,000,000 Do Not Introduce 0 0 Probability 0.3 0.7 You have the option to conduct a market survey to sharpen you market demand estimate. The survey costs $200,000. The survey provides incomplete information about the sales, with three possible outcomes: (1) predicts high sales, (2) predicts low sales, or (3) inconclusive. Such surveys have in the past provided these results Result High Low Predicts High 0.4 0.1 Inconclusive 0.4 0.5 Predicts Low 0.2 0.4 c) Draw the complete decision tree, including the survey option. Explain where the values on the decision tree come from
Suppose you plan to buy a new car and wish to pick a best one from a list of candidate models, shown in Table 1. To make this decision, you have designated a specialist to rate these models for you. In Table 2, each model has been given a score from 1 (the least desired) to 10 (the most desired) according to respective criteria. The weight of each criterion, representing its importance, is given in the bottom row of Table 1. Please calculate the overall score for each car model and find out the best alternative with the highest overall score. Table 1 Alternatives and Criteria of Selecting Car Price Fuel Efficiency Maintenance Access Interior Aesthetics Overall Score 1. Toyota Camry 8 8 7 9 2. Hyundai Elantra 9 8 5 8 3.Skoda Octavia 7 7 7 8 4.VW Passat 7 7 8 7 5.Citroen C4 7 8 7 9 Weights 0.3 0.4 0.2 0.1 China Eastern Airlines…
There are two outcomes: a good market and a bad market. , The decision table is presented below. There are four alternatives: do nothing, build a small plant, build a medium-size plant, and build a large plant. PAYOFFS Outcomes Alternatives Good market Bad market Do nothing $0 $0 Small Plant $30,000 ($10,000) Medium Plant $100,000 ($15,000) Large Plant $200,000 ($30,000) So you are to workout the Maximax, the Maximin, the Equally likely the Hurwicz based on a .11 probability and the regret using minimax. In words give the answers to these questions: What are your answers under: Answers Best payoff option for maximax is Common Stock Best payoff option for maximin is doing nothing Best payoff option for equally likely is Common Stock Best payoff option for Hurwicz is doing nothing Put a Bold Box around the word Outcomes Keep the Bad Market amounts in Red Ink Make the type style Ariel and Size 12 in Black
2 true or false If the decision doesn’t involve risk and uncertainty, utility is the numerical score to measure the attractiveness of a course of action.