Brainstorming Question Please show decision tree out of this scenario. I will ne

Question

                                                                        Brainstorming Question

Please show decision tree out of this scenario. I will need a decision comparison of purchasing groceries to cook or eating out in the scenario and circumstances I am demonstrating. My problem is whether to eat out or purchase my groceries. My possible alternative is not eating at all, eat leftovers I have or other people, or buy the food and I cook it. If I were to eat out I would feel fed. If cook my own food, I won't be hungry and give my body specific food to nourish myself. If I eat out, I have the payoff of convenience and fast food. If I eat at home, I end of up spending time preparing the cooking, cleaning but have the benefit of nutritious food in a sanitary environment. An optimistic approach seems to be an excellent model to solve this dilemma because it allows me to look at the best scenario to make my choice but there can be better models.

Spending time with family and friends eating out is great because it allows me to bond with them. At the end of the day, I think it is best for me to purchase my groceries because the benefits outweigh my choice of eating out. Nothing beats a nutritious cooked meal and being able to share that meal with a friend or family member.

Please show a decision tree that presents this dilemma and the most optimistic result which is purchasing my groceries. Thank you.

Explanation / Answer

The benefit of doing a little bit more of something is called as its marginal benefit, and the cost of doing a little bit more of something is called as its marginal cost.Lets assume that as the CEO of Walmart, a decision needs to be made on the addition of a new product in stores. The marginal benefit will be the turnover generated by the addition of the product whereas the marginal cost will be the cost of adding to product to the shelves. The theory of marginal analysis states that whenever marginal benefit exceeds marginal cost, there should be an increase in the activity to reach the highest net benefit.

Similarly, if marginal cost is higher than marginal benefit, activity should be decreased. Sunk costs, fixed costs and average costs do not affect marginal analysis. They are irrelevant to the optimal decision-making.

For example, marginal analysis shows that the additional product provides net marginal benefit. This does not necessarily make the addittion the right decision. Suppose it is also know that giving more space to an existing product yields even larger net marginal benefit. In this case, adding a new product is the wrong decision because it is suboptimal. The opportunity cost (cost of the loss of other alternatives when one alternative is chosen) is higher in this case, making it suboptimal.

When choices are made (collectively or by an individual) to accept having less of one thing in order to get more of something else, the results are called trade-offs.

We are allocating (limited) space, the trade-off involves reduced space for the existing products in order to be able to give the space to the addttional product.

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