An oil company is considering making a bid on a new alternative energy contract to be awarded

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An oil company is considering making a bid on a new alternative energy contract to be awarded by the government. The company has decided to bid $2.10 billion. The oil company has a good reputation, and it estimates that it has a 70% chance of winning the contract bid. If the oil company wins the contract, the oil company management has decided to pursue one of two options: either design an electric car or develop a new fuel substitute. The development cost of the new design for the electric car is estimated at $300 million. The estimated revenue and probabilities of success associated with developing and marketing the electric car are as follows:

Event Extremely successful Moderately successful Weakly successful Event Probability of developing and

Construct a decision tree and determine the oil company's best strategy.

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Related Book For  book-img-for-question

A First Course In Mathematical Modeling

ISBN: 9781285050904

5th Edition

Authors: Frank R. Giordano, William P. Fox, Steven B. Horton

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