Expected payoffs High Demand Yes Moderate Demand Transition Probabilities Competitor Opens Demand - High Demand - Moderate Demand - Low Demand CT - High Demand CT. Moderate Demand CT - Low Demand do nothing) 42% 159 45% 40% 15% 45% 40% 33.33% You are the administrator for a small, locally-owned emergent care facility. You are exploring the options for increasing services, with a likely need for expanding your clinic imaging capabilities. After hiring a consulting firm, you have been given some expected annual payoffs (in dollars) of each of the decision alternatives. Unfortunately, since the last analysis you have learned that a competitor may be expanding their services as well. Complete the decision tree below. Of note, the expected payoffs for high/moderate/low demand are 50% of what they would be if a competitor decided not to open. Identify the expected payoff for each alternative. Low Demand Competitor High Demand $1,000,000 Opens 1. 2. What is the expected payoff for an MRI? Moderate Demand $750,000 3. What is the expected payoff for a CT? Low Demand $500,000 MRI 4. What is the expected payoff for doing nothing? High Demand $ 5. Which alternative would you choose to maximize revenue? Yes Moderate Demand $ Imaging Equipment Low Demand Thankfully, the competitor is now projected less likely to openwhich is believed to now be 20%. However, now the demand projections for CT imaging has changed to 5% for high demand, 15% for moderate demand, and 80% for low demand. Use this updated information to update your estimates. Competitor Opens High Demand $1,200,000 6. What is the expected payoff of an MRI? Moderate Demand $900,000 Do Nothing 7. What is the expected payoff of a CT? Low Demand $600,000 8. What is the expected payoff for doing nothing? Yes High Demand $200,000 9. Which alternative would you choose to maximize revenue? Competitor Opens Moderate Demand $0 Low Demand $400,000 NO All Demands $0 Expected payoffs High Demand Yes Moderate Demand Transition Probabilities Competitor Opens Demand - High Demand - Moderate Demand - Low Demand CT - High Demand CT. Moderate Demand CT - Low Demand do nothing) 42% 159 45% 40% 15% 45% 40% 33.33% You are the administrator for a small, locally-owned emergent care facility. You are exploring the options for increasing services, with a likely need for expanding your clinic imaging capabilities. After hiring a consulting firm, you have been given some expected annual payoffs (in dollars) of each of the decision alternatives. Unfortunately, since the last analysis you have learned that a competitor may be expanding their services as well. Complete the decision tree below. Of note, the expected payoffs for high/moderate/low demand are 50% of what they would be if a competitor decided not to open. Identify the expected payoff for each alternative. Low Demand Competitor High Demand $1,000,000 Opens 1. 2. What is the expected payoff for an MRI? Moderate Demand $750,000 3. What is the expected payoff for a CT? Low Demand $500,000 MRI 4. What is the expected payoff for doing nothing? High Demand $ 5. Which alternative would you choose to maximize revenue? Yes Moderate Demand $ Imaging Equipment Low Demand Thankfully, the competitor is now projected less likely to openwhich is believed to now be 20%. However, now the demand projections for CT imaging has changed to 5% for high demand, 15% for moderate demand, and 80% for low demand. Use this updated information to update your estimates. Competitor Opens High Demand $1,200,000 6. What is the expected payoff of an MRI? Moderate Demand $900,000 Do Nothing 7. What is the expected payoff of a CT? Low Demand $600,000 8. What is the expected payoff for doing nothing? Yes High Demand $200,000 9. Which alternative would you choose to maximize revenue? Competitor Opens Moderate Demand $0 Low Demand $400,000 NO All Demands $0