Reconsider the Goferbroke Co. prototype example, including its analysis in Sec. 16.3. With the help of a consulting geologist, some historical data have been obtained that provide more precise information on the likelihood of obtaining favorable seismic soundings on similar tracts of land. Specifically, when the land contains oil, favorable seismic soundings are obtained 80 percent of the time. This percentage changes to 40 percent when the land is dry.
(a) Revise Fig. 16.2 to find the new posterior probabilities.
(b) Use the Excel template for posterior probabilities to check your answers in part (a).
(c) What is the resulting optimal policy?