Suppose you want to mine for gold. Your decisions are to build a mine or not, and to hire a geologist or not. If you find gold, you will earn R2 million in profit; if you fail to find gold, you will lose RO.5 million. On the geologist's website, he states he predicts success 50% of the time and failure 50% of the time; when he predicts success, then you are 80% likely to actually succeed; when he predicts failure, then you are 90% likely to actually fail. The geologist costs R0.1 million. You estimate without a geologist you have a 45% chance of success. Use a decision tree to maximize your expected value.
Q: A graph that helps decision makers use probability theory by showing the expected values of…
A: A. A body of techniques for comparing the results of possible deicison during a risk situation.…
Q: A scientist works in a lab with four summer interns and, as it is the end of the summer, he…
A: Strategy refers to the plan drafted by the organization to accomplish the aim under the uncertainty…
Q: For the Orlando real estate investment problem, assume the probabilities for the gasoline shortage,…
A: Given data is
Q: Donald Harris received a windfall and needs to invest it for tax reasons. He went to his…
A: Given data, Future Air Traffic Strategies Major Downturn Downturn Upturn Major Upturn…
Q: n oil company is trying to decide whether to drill for oil in a particular field. It costs the…
A:
Q: Mr. Maloy has just bought a new $30,000 sport utility vehicle. As a reasonably safe driver, he…
A: If Insurance been taken Accident type Conditional Probability Damage to vehicle Insurance Cost…
Q: A company is considering whether to market a new product. Assume, for simplicity, that if this…
A:
Q: Chemitronix Ltd. is a microchips manufacturing company. It was found that the business is at the…
A: Expected monetary value = Chance of gain* Monetary gain + Chance of loss*Monetary loss For…
Q: The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan,…
A: Given- The state-of-nature probabilities and relevant conditional probabilities are as follows:…
Q: of hybrid cars that have be requested for rental from a car rental office during a 50 day sample…
A: Demand for Cars Number of Days Probability 3 3…
Q: Chemitronix Ltd. is a microchips manufacturing company. It was found that the business is at the…
A: SOLUTION:
Q: Management of the Toys R4U Company needs to decide whether to introduce a certain new novelty toy…
A: Let the decision variable, X=Number of the toys to produce. Fixed cost, F= $500000 Variable cost, V…
Q: A NY Times best-selling author wants to write a new book as either volume II of her earlier…
A: Note: - As we can answer only up to three subparts we will answer the first three subparts here.…
Q: Topford supplies X-Data DVDs in lots of 50, and they have a reported defect rate of 0.5% so the…
A: None of the above
Q: After meeting with the regional sales managers, Lauretta Anderson, president of Cowpie Computers,…
A: Given information: Sales Grow = 10% New operating System = 30% Sales increases = 10% Sales…
Q: The likelihood that economic mismanagement will cause drastic changes in a country’s business…
A: An "Economic risk" is defined as a likely hood that economic mismanagement would result in causing…
Q: An entertainment manager has to organize a concert and is offered the options of doing it outdoors…
A: Since you have submitted a question with multiple subparts, as per guidelines I have answered the…
Q: States of Nature Alternatives Very Favorable Market Average Market Unfavorable Market Build new…
A: Maximax Criteria is the decision-making criteria in which an optimistic decision is taken where…
Q: Your firm is considering purchasing an old office building with an estimated remaining service life…
A:
Q: A producer of pocket calculators estimates that the calculators fail at a rate of oneevery five…
A: The worthiness to purchase a calculator with warranty or without warranty can be analysed as…
Q: The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan,…
A: Given data: state of nature low demand medium demand high demand Decision…
Q: Oilco must determine whether or not to drill for oil in the South China Sea. It costs $100,000, and…
A: The rise in anticipated value owing to obtaining additional knowledge about an unknown quantity is…
Q: Home price y is estimated as a function of the square footage of a house x and a dummy variable d…
A: Given: y = 118.90 +0.12x + 52.60d i.) For a house with mountain views, d = 1 For a house with…
Q: The management of a company is interested in using simulation to estimate the profit per unit for a…
A: From the given data we found that Selling price = $45/unit Purchase cost ($) Labour cost…
Q: The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan,…
A: Given data is Ps1 = 0.35 Ps2 = 0.35 Ps3 = 0.30
Q: The state-of-nature probabilities are P(s1) = 0.35, P(s2) = 0.35, and P(s3) = 0.30. a.Use expected…
A: Below is the solution:-
Q: The probability of business doing good is 0.7 and the probability of slow business is 0.3. Using…
A: He can easily buy the factory as the probability is 0.7 of good. ANSWER is BUY.
Q: Based on a sample of 80 recent MBA graduates (40 male and 40 female), the following information was…
A: a) Mean Salary within 10,000 means within 40000/4 = σ/4 = 0.25σ Lets assume the Standard normal…
Q: The lease of Theme Park, Inc., is about to expire. Management must decide whether to renew the lease…
A: Formula: Answer:
Q: 3. The manager for a manufacturing company must recommend whether to construct a large plant,…
A: Find the Given details below: Given details: Alternative State of Nature Good Market ($)…
Q: The owner of a small business is considering three options: buying a computer, leasing a computer,…
A: Given data; Alternative State #1 (S1) State #2 (S2) State#3 (S3) A1 4 6 5 A2 7 5 1 A3…
Q: c. From the following decision tree, develop a payoff table and calculate: * Maximax, Minimax…
A: The value for each of the payoffs and criteria are calculated in excel with the formulas shown in…
Q: policy or mechanism could solve any informational imbalances
A: An EVPI (expected value of perfect information) is the difference between actual highest return and…
Q: Jane is a Halloween pumpkin vendor serving her own neighborhood. She purchases pumpkins for $5 each…
A: Cost = $5 Selling price = $10 Salvage value = $3 Marginal profit = Selling price - Cost = 10 - 5 =5…
Q: If the farmer uses pesticides he expects a crop of 60,000 bushels; if he does not use pesticides he…
A: Cost of Pesticides = $20,000 Other Costs = $450,000 Price of corn: P1 = $10 (probability = 0.50) P2…
Q: Joseph owns a medium sized business that has been increasingly successful over the past several…
A: INTRODUCTION: A pension plan is an investment strategy for retirement that offers benefits to…
Q: At the beginning of each day, a patient in the hospital is classifed into one of the three…
A: Below is the solution:-
Q: A company is considering whether to market a new product. Assume, for simplicity, that if this…
A:
Q: We are thinking of filming the Don Harnett story. Weknow that if the film is a flop, we will lose $4…
A:
Q: When a choice is communicated in terms of potential losses, most people choose the option with less…
A: The statement is almost true. Business risk could be a wide category. It applies to any occasion or…
Q: Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to…
A: The timeline is: The cash flows for this problem occur monthly, and the interest rate given is the…
Q: Cliff Colby wants to determine whether his South Japanoil field will yield oil. He has hired…
A:
Q: The Gorman Manufacturing Company must decide whether to manufacture a component part at its plant or…
A: As there are two alternatives, two branch nodes are drawn. For each alternative, there are 3 states…
Q: Texas Petroleum Company is a producer of crude oil that is considering two drilling projects with…
A: There are two projects, and one project needs to be chosen. Apart from this, the utility indexes…
Q: Your company must decide whether to introduce a new product. The sales of the product will be either…
A: There are two alternatives. 1. Introduce a new product 2. Do not introduce a new product…
Q: What is the probability that the satellite described in Solved Problem 4 will fail between 5 and…
A: P (5 years < failure< 12 years) = P (failure after 5 years) - P (failure after 12 years) Using…
Q: The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan,…
A: low demand medium demand high demand Decision alternative s1 s2 s3 manufacture d1 -20 40 100…
Q: A business owner is planning to strategize his company's growth. He can either buy, rent, or lease a…
A: Given information- The probability of business doing good = 0.7 The probability of a slow business…
Q: perfect information on all cars
A: EVPI (expected value of perfect information) indicating the loss of unknow market state…
Step by step
Solved in 2 steps with 1 images
- You now have 5000. You will toss a fair coin four times. Before each toss you can bet any amount of your money (including none) on the outcome of the toss. If heads comes up, you win the amount you bet. If tails comes up, you lose the amount you bet. Your goal is to reach 15,000. It turns out that you can maximize your chance of reaching 15,000 by betting either the money you have on hand or 15,000 minus the money you have on hand, whichever is smaller. Use simulation to estimate the probability that you will reach your goal with this betting strategy.The game of Chuck-a-Luck is played as follows: You pick a number between 1 and 6 and toss three dice. If your number does not appear, you lose 1. If your number appears x times, you win x. On the average, use simulation to find the average amount of money you will win or lose on each play of the game.At the beginning of each week, a machine is in one of four conditions: 1 = excellent; 2 = good; 3 = average; 4 = bad. The weekly revenue earned by a machine in state 1, 2, 3, or 4 is 100, 90, 50, or 10, respectively. After observing the condition of the machine at the beginning of the week, the company has the option, for a cost of 200, of instantaneously replacing the machine with an excellent machine. The quality of the machine deteriorates over time, as shown in the file P10 41.xlsx. Four maintenance policies are under consideration: Policy 1: Never replace a machine. Policy 2: Immediately replace a bad machine. Policy 3: Immediately replace a bad or average machine. Policy 4: Immediately replace a bad, average, or good machine. Simulate each of these policies for 50 weeks (using at least 250 iterations each) to determine the policy that maximizes expected weekly profit. Assume that the machine at the beginning of week 1 is excellent.
- You now have 10,000, all of which is invested in a sports team. Each year there is a 60% chance that the value of the team will increase by 60% and a 40% chance that the value of the team will decrease by 60%. Estimate the mean and median value of your investment after 50 years. Explain the large difference between the estimated mean and median.An expensive piece of equipment is used in the masking operation for semiconductor manufacture.A capacitor in the equipment fails randomly. The capacitor costs $7.50, but if it burns out while the machine is in use, the production process must be halted. Here the replacement cost is estimated to be $150. Based on past experience, the lifetime distribution of the capacitor is estimated to be Number of Months Probability of of Service Failure 1 .08 2 .12 3 .16 4 .26 5 .22 6…3. The manager for a manufacturing company must recommend whether to construct a large plant, construct a small plant or do nothing. He estimates the long-run profits in $ as follows: State of Nature Alternative Good Average Poor Market($) Market ($) Market ($) Construct a 100,000 35,000 -60,000 large plant Construct a 75,000 25,000 -40,000 small plant Do nothing -5,000 0 0 Probability 25% 50% 25% Solve using: A. Expected Opportunity Loss B. Expected Value of Perfect Information
- A company is considering whether to develop and market a particular product. There is 40% probability that the research and development department will come up with a viable product, and a 60% probability that the product will be scrapped. The cost of undertaking the research and development is 200 000.10 Investors will be indifferent between two investments if both investments have the same expected return. Select one: True FalseHow would I calculate the expected values for probabilities that aren't a single value such as 1-4% and >4%?
- Texas Petroleum Company is a producer of crude oil that is considering two drilling projects with the following profit outcomes and associated probabilities: Drilling Project, A Profit -$300,000 100,000 500,000 600,000 Probability (percent) 10 60 20 10 Drilling Project, B Profit -$600,000 100,000 300,000 1,000,000 The manager's attitude toward risk is as follows: Profit ($'000) -600 -300 100 U(II) 0.00 0.05 0.20 Note: U(II) stands for utility index of profit. 300 0.30 500 0.45 Probability (percent) 15 25 40 20 600 0.55 1,000 1.00 In making decision under risk, which project will be chosen by the manager of Texas Petroleum Company based on his behaviour toward risk? Also describe the manager's ways of handling decision-making associate with risk. Justify your answers using numerical explanation.A salesperson uses three different airlines. The probabilities of switching from one airline to another in consecutive flights are shown below. If the last flight was on Delta, what is the probability that the next was on American? American Delta Southwest American 0.5 0.25 0.25 Delta 0.2 0.6 0.2 Southwest 0.3 0.3 0.4 A 0.5 B 0.2 C 0.25 D 0.6The company is considering whether or not they should drill the land. The cost of drilling is estimated to be $4 million. The company believes there are three possible findings after drilling the land: dry, wet and gushing. The probabilities for these outcomes are 0.5, 0.3 and 0.2, respectively. If the land is found to be dry, it obviously offers no profit. If the land is wet, it brings a potential profit of $10 million. If gushing, the potential profit from the land is $30 million. Answer the following questions, Q1 and Q2. Q1: Draw a decision tree to show the decision for this company based on the EMV criterion. Nodes and arcs are provided below and you can make more of them by using "copy" and "paste" Q2: The company has the option of using some new technology and equipment combined with seismic survey data to learn the presence of oil (dry, wet or gushing) before drilling the land. However, it requires $2.3 million investment for the technology, equipment, and required analysis. Is…