U a IS A 2 ) 1 a a A. Hurricane Katrina, a tropical cyclone, developed...

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U a IS A 2 ) 1 a a A. Hurricane Katrina, a tropical cyclone, developed from a tropical wave about 175 miles east of Nassau, Bahamas. In the early morning of August 29, Katrina made its second landfall near Buras, Louisiana as a Category 4 storm featuring 140-mph winds, and its eyewall passed over the eastern edge of New Orleans as the hurricane made its way to water once again. As the hurricane approached landfall near New Orleans, Mayor Ray Nagin placed the city under a mandatory evacuation order. Draw an influence diagram of at least 20 nodes depicting his decision to do this. B. A company has to decide whether to invest money in the development of a microbiological product. The company's research director has estimated that there is a 60% chance that a successful development could be achieved in two years. However, if the product had not been successfully developed at the end of this period, the company would abandon the project, which would lead to a loss in present value terms of $3 million. In the event of a successful development a decision would have to be made on the scale of production. The returns generated would depend on the level of sales which could be achieved over the period of the product's life. For simplicity, these have been categorized as either high of low. If the company opted for large-volume production and high sales were achieved then net returns with a present value of $6 million would be obtained. However, large-scale production followed by low sales would lead to net returns with a present value of only $1 million. On the other hand, if the company decided to invest only in small-scale production facilities, then high sales would generate net returns with a present value of $4 million and low sales would generate net returns with a present value of $2 million. The company's marketing manager estimates that there is 75% chance that high sales could be achieved. Note: attempt to construct and solve the tree using Decision Tools-PrecisionTree. a) Construct a decision tree to represent that company's decision problem. b) Assuming that the company's objective is to maximize its expected returns, determine the policy that it should adopt. c) There is some debate in the company about the probability that was estimated by the research director. Assuming that all other elements of the problem remain the same, determine how low this probability would have to be before the option of not developing the product should be chosen. U a IS A 2 ) 1 a a A. Hurricane Katrina, a tropical cyclone, developed from a tropical wave about 175 miles east of Nassau, Bahamas. In the early morning of August 29, Katrina made its second landfall near Buras, Louisiana as a Category 4 storm featuring 140-mph winds, and its eyewall passed over the eastern edge of New Orleans as the hurricane made its way to water once again. As the hurricane approached landfall near New Orleans, Mayor Ray Nagin placed the city under a mandatory evacuation order. Draw an influence diagram of at least 20 nodes depicting his decision to do this. B. A company has to decide whether to invest money in the development of a microbiological product. The company's research director has estimated that there is a 60% chance that a successful development could be achieved in two years. However, if the product had not been successfully developed at the end of this period, the company would abandon the project, which would lead to a loss in present value terms of $3 million. In the event of a successful development a decision would have to be made on the scale of production. The returns generated would depend on the level of sales which could be achieved over the period of the product's life. For simplicity, these have been categorized as either high of low. If the company opted for large-volume production and high sales were achieved then net returns with a present value of $6 million would be obtained. However, large-scale production followed by low sales would lead to net returns with a present value of only $1 million. On the other hand, if the company decided to invest only in small-scale production facilities, then high sales would generate net returns with a present value of $4 million and low sales would generate net returns with a present value of $2 million. The company's marketing manager estimates that there is 75% chance that high sales could be achieved. Note: attempt to construct and solve the tree using Decision Tools-PrecisionTree. a) Construct a decision tree to represent that company's decision problem. b) Assuming that the company's objective is to maximize its expected returns, determine the policy that it should adopt. c) There is some debate in the company about the probability that was estimated by the research director. Assuming that all other elements of the problem remain the same, determine how low this probability would have to be before the option of not developing the product should be chosen.