Joseph Biggs owns his own ice cream truck and lives 30 miles from a Florida beach resort. The sale of his products is highly dependent on his location and on the weather. At the resort, his profit will be $ 120 per day in fair weather, $ 10 per day in bad weather. At home, his profit will be $ 70 in fair weather and $ 55 in bad weather. Assume that on any particular day, the weather service suggests a 40% chance of foul weather.
a) Construct Joseph’s decision tree.
b) What decision is recommended by the expected value criterion?

  • CreatedMarch 20, 2014
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