d. What is the probability that the project can be completed in 25 or fewer days
ID: 3199277 • Letter: D
Question
d. What is the probability that the project can be completed in 25 or fewer days? 2. Dr. Mac, a surgeon, must decide what mode of treatment to use on Mr. Samuels. There are three modes of treatment: Mode A, B, and C; and three possible states of nature: 1. Treatment succeeds and patient leads a normal life, 2. Patient survives treament ut is mermaled dapatie to survive treatment. Dr. Mac has prepared the decision table below. What mode of treatment maximizes the expected value? Treatment Mode Outcome Normal Life Disability Non-Survival S1,000,000 $2,000,000 -S500,000 $3,000,000 S2,500,000 $500,000 S10,000,000 S5,000,000 S600,000 P(outcome) P(outcome)5 .3 Proutcome) A) Mode A B) Mode EB C) Mode C D) All three treatments are equally desirable. E) Normal LifeExplanation / Answer
The doctor hadto decide which process yields better outcomes profitably i.e., a decision with good results (survival) and also good returns for the doctor. So this will be the nashequilibrium in this case
For Process A,
E(A)= 0.5*$1,000,000 + 0.2*(-$2,000,000) + 0.3*(-$500,000) = -$50,000
For Process B,
E(B)= 0.5*$3,000,000 + 0.3*(-$2,500,000) + 0.2*(-$500,000) = $650,000
For Process C,
E(C)= 0.4*$10,000,000 + 0.4*(-$5,000,000) + 0.2*(-$600,000) = $1,880,000
The Patient will chosse for a normal life whatsoever is the treatment and not at all want to be in the non-survival case. Since the chances for survival with normal is more in B than other options. The treatment must be B and it is optimally profitable as it gives an average return of $650,000.
So the answer is (B) Mode B.
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