Construct a graph that can be used for sensitivity analysis for the preceding problem.
a. How sensitive is the solution to the problem in terms of the probability estimate of .35?
b. Suppose that, after consulting with a member of the town planning board, management decides that an estimate of approval is approximately .45. How sensitive is the solution to this revised estimate? Explain.
c. Suppose the management is confident of all the estimated payoffs except for $ 4 million. If the probability of approval is .35, for what range of payoff for renew/ reject will the alternative selected using the maximum expected value remain the same?

  • CreatedDecember 30, 2014
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