Cohan and Associates (1984). Modern forest management uses controlled fires to reduce fire hazards and to stimulate new forest growth. Management has the option to postpone or plan a burning. In a specific forest tract, if burning is postponed, a general administrative cost of $300 is incurred. If a controlled burning is planned, there is a 50% chance that good weather will prevail and burning will cost $3200. The results of the burning may be either successful with probability .6 or marginal with probability .4. Successful execution will result in an estimated benefit of $6000, and marginal execution will provide only $3000 in benefits. If the weather is poor, burning will be cancelled incurring a cost of $1200 and no benefit.

(a) Develop a decision tree to determine whether burning should be planned or postponed.

(b) Study the sensitivity of the solution to changes in the probability of good weather.