Question: 1. How many decision nodes should the tree have? 2. How many uncertainty nodes should the tree have? 3. What is the optimal decision? a.

1. How many decision nodes should the tree have?

1. How many decision nodes should the tree have?

2. How many uncertainty nodes should the tree have?

3. What is the optimal decision?

a. Offer Full Service

b. Offer Discount Service

c. If demand is strong, offer Full Service. Otherwise, offer Discount Service.

d. If demand is strong, offer Discount Service. Otherwise, offer Full Service.

4. What is the expected value of the optimal decision?

e. None of the above

Myrtle Air Express has decided to offer direct service from San Jose to Myrtle Beach. Management must decide between offering a full-price service and a discount service. Management developed estimates of the contribution to profit for each type of service based upon two possible levels of demand for service to Myrtle Beach: strong and weak. The following table shows the estimated quarterly profits (in thousands of dollars): Service Demand for Service Strong Weak Full Price $960 -$490 Discount $670 $320 The probability that demand is strong is 0.7 and the probability that demand is weak is 0.3. The demand won't be known until after the new service is implemented

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