Question: Including Draw cash flow tree digram please. The decision sciences department is trying to determine whiclh of two copying machines to purchase. Both machines will
The decision sciences department is trying to determine whiclh of two copying machines to purchase. Both machines will satisfy the department's needs for the next ten years. Machine 1 costs $2,000 and has a maintenance agreement, which, for an annual fee of S150, covers all repairs. Machine 2 costs $3,000, and its annual maintenance cost is a random variable. At present, the decision sciences department believes there is a 40% chance that the annual maintenance cost for machine 2 will be $0, a 40% chance it will be $100, and a 20% chance it will be $200. Before the purchase decision is made, the department can havea trained repairer evaluate the quality of machine. If the repairer believes that machine 2 is satisfactory, there is a 60% chance that its annual maintenance cost will be $0 and a 40% chance it will be $100. If the repairer believes that machine 2 is unsatisfactory, there is a 20% chance that the annual maintenance cost will be $0, a 40% chance it will be $100, and a 40% chance it will be $200. If there is a 50% chance that the repairer will give a satisfactory report, what is EVSI? If the repairer charges $40, what should the decision sciences department do? What is EVPI
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