# Question: Refer to Problem 1 Suppose after a certain amount of

Refer to Problem 1. Suppose after a certain amount of discussion, the contractor is able to subjectively assess the probabilities of low and high demand: P (low) = .3 and P (high) = .7.

a. Determine the expected profit of each alternative. Which alternative is best? Why?

b. Analyze the problem using a decision tree. Show the expected profit of each alternative on the tree.

c. Compute the expected value of perfect information. How could the contractor use this knowledge?

a. Determine the expected profit of each alternative. Which alternative is best? Why?

b. Analyze the problem using a decision tree. Show the expected profit of each alternative on the tree.

c. Compute the expected value of perfect information. How could the contractor use this knowledge?

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