I NEED THIS PROBLEM ANSWERED CORRECTLY PLEASE Decision Analysis Case Problem: Pr
ID: 3824700 • Letter: I
Question
I NEED THIS PROBLEM ANSWERED CORRECTLY PLEASE Decision Analysis Case Problem: Property Purchase Strategy The decision tree for the oceanview decision problem is shown below. Note that the final outcome of and whether the zoning change is approved or rejected by the voters occurs after Oceanview decides to bid then wins the bid otherwise, the outcome of the vote on the zoning change does not enter into the problem. Payoff Approvea 1,985,000 Highest Bid Zonin 515,000 ejec est Bid -15,000 Not Hi Approval Do Not Bid 15,000 Approved 1985.000 Highest Bid Market 10 Rejected -515,000 Bid Predicts Not H Bid -15,000 Rejection Do Not Bid 15,000 Zoning 2,000,000 Approved Highest Bid Rejected .500 Bid No Market Not Highest Bid Do Not Bid Payoff values are the profit computed from the given revenue, property cost, construction expenses, property cost deposit and marketing research cost given in the problem.Explanation / Answer
Using information given in the above question, two decision tree has been made to show excepted value and logical sequence of the following decision problem.
Decision Tree: Figure 1 The zoning only occurs when Oceanview bids and wins. There is no other option if Oceanview does not bid, the decision tree will end. so according to decision tree oceanview need to bid.
2. It is highly recommended for Oceanview to continue and bid if there was no market research conducted. This is because the expected value of that decision is $50,000. To make this clear, it is shown in decision tree. The option is shown in node 8 of the decision tree in the given figure. Decision Tree: next figure with the excepted values. It is a suggested strategy for a market research to be conducted first. Following the decision tree in Figure 2, we predict that the expected value of the market research is higher than the cost of conducting the research itself.
We could conclude as below: A· Market research predicts approval in Node 2, Oceanview suggested to bid A· Market research predicts rejection in Node 2, Oceanview suggested to not bid 4. It is recommended for Oceanview to employ the market research firm. It is predicted this strategy expected value is $78,993 including the cost of conducting the market research.
With this the market research has a value of $78,993 - $50,000 = $28,993.
This is favourable outcome to Oceanview.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.