The CEO of McBurger considers opening a new restaurant with two size options: la
ID: 3247162 • Letter: T
Question
The CEO of McBurger considers opening a new restaurant with two size options: large model (Large) and small model (Small). She anticipates two possible states of peak-hour demand at the new location: high demand (H) with a probability of 0.75 and low demand (L) with a probability of 0.25. The CEO uses the expected value criterion for decision making and she developed the original decision tree below.
The optimal decision is ___.
Large
Large and High
Low
High
Small
a.Large
b.Large and High
c.Low
d.High
e.Small
Explanation / Answer
as given high demand (H) with a probability of 0.75
low demand (L) with a probability of 0.25.
we have
the optimal decision is
large and high from the tree
answer is option b
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