You plan to pour concrete on Monday morning, but you heard a weather forecast th

Question

You plan to pour concrete on Monday morning, but you heard a weather forecast that rain is
expected. The probabilities of rain are 0.8 on Monday, 0.6 on Tuesday, 0.3 on Wednesday,
and 0.1 on Thursday, Friday, Saturday, Sunday, and the following Monday and Tuesday. If it
rains on the day that concrete is poured, there will be an immediate $10,000 damage cost and
a delay of five days in the construction schedule. For every day of delay, $4000 is lost.
Determine (using a decision tree) on which day the concrete should be poured. What is the
associated expected cost?

Explanation / Answer

Loss= Probability*(Loss due to rain + 5 * Loss due to delay)

Councrete should be poured on Thursday as after that the total loss(3000) remains same.

Day Probability Loss after Rain damage Total Loss Monday 0.8 4000 10000 24000 Tuesday 0.6 4000 10000 18000 Wednesday 0.3 4000 10000 9000 Thursday 0.1 4000 10000 3000 Friday 0.1 4000 10000 3000 Saturday 0.1 4000 10000 3000 sunday 0.1 4000 10000 3000 Monday 0.1 4000 10000 3000 Tuesday 0.1 4000 10000 3000

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