For this problem, use the following payoff table:
a. Construct an opportunity loss table.
b. Construct a decision tree.
a.
Make an opportunity table using the given payoff table.
Explanation of Solution
The payoff table is given.
Use Excel to construct an opportunity loss table.
Software procedure:
The step-by-step procedure to make an opportunity loss table is given below.
Select Add-Ins > PHStat > Decision-Making > Opportunity Loss.
In the opportunity loss dialog, fill Number of Events as 2 and Number of Alternative Actions as 2.
Click OK.
In the template generated by Excel, fill the payoff table as given in the problem.
The excel output for opportunity loss table is shown below.
b.
Construct a decision tree for the given payoff table.
Explanation of Solution
The tree diagram for the given payoff table is given below.
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Chapter 20 Solutions
Basic Business Statistics, Student Value Edition (13th Edition)
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