Exercise $3\mathrm{.}6\mathrm{.}1$: CAMPUS BEAUTIFICATION $2$

You are considering bidding on the next phase of ECU$$s campus beautification project. The value of the

contract depends on the length of time it will take you to complete the job. If the job is completed on

time, there is a profit of $$50,000.$ If you are late in completing the job, you will lose $$10,000.$ Weather is

the sole determinant of whether the project will be late. If the weather is good, the project will be

completed on time; if it is bad, the job will not be completed on schedule. Based on your past

experience, your subjective estimate of the probability of good weather is $20\%.$

You do have the opportunity to buy a long$$range weather forecast from an independent weather

forecasting company. You have checked with past clients of the forecasting company and found that

when the forecasting company predicted good weather, $46\mathrm{.}7$ of past clients did indeed experience good

weather. When the forecasting company predicted bad weather, $91\mathrm{.}4\%$ of the clients indeed

experienced bad weather. Your consultations with past clients also revealed that the probability that the

forecasting company would issue a long$$range forecast for good weather was $30\%.$

Roll back the decision tree, calculate EVSI and determine the optimal strategy for this decision problem.