An oil company is considering making a bid on a new alternative energy contract to be awarded
Question:
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:
Construct a decision tree and determine the oil company's best strategy.
Step by Step Answer:
A First Course In Mathematical Modeling
ISBN: 9781285050904
5th Edition
Authors: Frank R. Giordano, William P. Fox, Steven B. Horton