Joseph Biggs owns his own sno-cone business and lives 30 miles from a California beach resort. The sale of sno-cones 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 clay 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?

  • CreatedJuly 23, 2013
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