Consider the following decision tree. Which decision, A or B, is best? What is the expected value of this decision?.40$3,000AB2.20.80OA, expected payoff = $2,000OA, expected payoff = $2,120OB, expected payoff = $1,800OA, expected payoff = $2,100.60-$1,000$2,500$2,000$1,800

First, I would determine the expected payoff for each node, Here, there are two alternatives, For…

Answered: Consider the following decision tree.…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 21P

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Given is a Decision Tree Diagram. The Payoffs 1-14 are given in the table below. Answer questions a, b, and c. 1/3 PayOff 5.. 1/3 PayOff 2 1/3 PayOff 3 0.30 0.50 PayOff 4 PayOff 5 Alternative A 0.20 PayOff 6 Alternative B 0.30 0.50 1/3 PayOff 7 1/3 2 PayOff 8 1/3 PayOff 9 5 PayOff 10 PayOff 11 0.20 PayOff 12 1/2 6 PayOff 13 3 1/2 PayOff 14 Payo 1 2 3 5 6 7 8 9 10 11 12 13 14 ff $ 5 -2 5 2 9 2 5 -5 3 4 4 -3 7 6 a) The value at node 4 is Blank 1 b) The value at node 8 is Blank 2 (in 1 decimal place) c) The best course of action or decision is to select alternative Blank 3
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8. Ms. Rabiya Mateo and Ms. Sandra Lemonon, two real-estate investment partners, are assessing the relative risks of a prime property in Taguig City, and a comparable property in a similarly vibrant area of Iloilo City. One partner discounts heavily the value of the Taguig property because of the potential earthquake damage. The Taguig City-averse partner is most likely influenced by which element of risk management analysis? a. Risk Prioritization b. Risk Severity c. Risk Psychology d. Risk Response

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Consider the following decision tree. Which decision, A or B, is best? What is the expected value of this decision? .40 $3,000 1 A B .20 .80 3 OA, expected payoff = $2,000 OA, expected payoff = $2,120 OB, expected payoff = $1,800 OA, expected payoff = $2,100 4 .60 -$1,000 $2,500 $2,000 $1,800