Question: Make a dicision tree, Find MaxEMV and EVSI with clear steps please. Note, the final answer is provided in the 2nd picture, but without steps

Make a dicision tree, Find MaxEMV and EVSI with

Make a dicision tree, Find MaxEMV and EVSI with

Make a dicision tree, Find MaxEMV and EVSI with clear steps please. Note, the final answer is provided in the 2nd picture, but without steps

Q.3 Abdullah Al-Mahrouqi is considering about producing a new type of electric beard trimmer for men. If the market were favorable, he would get a return of RO 80,000, but if the market for this new type of beard trimmer were unfavorable, he would lose RO 48,000. Since Ahmed Al-Farsi is a good friend of Abdullah Al-Mahrouqi, Abdullah is considering the possibility of using Al-Farsi Marketing Research to gather additional information about the market for the beard trimmer. Ahmed has suggested that Abdullah use either a survey or a pilot study to test the market. The survey would be a sophisticated questionnaire administered to a test market. It will cost RO 4,000 Another alternative is to run a pilot study. This would involve producing a limited number of the new beard trimmers and trying to sell them in Al-Khoudh and Al-Seeb. The pilot study is more accurate but is also more expensive. It will cost RO 16,000 Ahmed Al- Farsi has suggested that it would be a good idea for Abdullah to conduct either the survey or the pilot before Abdullah makes the decision concerning whether to produce the new beard trimmer. But Abdullah is not sure if the value of the survey or the pilot is worth the cost. Abdullah estimates that the probability of a successful market without performing a survey or pilot study is 0.5. Furthermore, the probability of a favorable survey result given a favorable market for beard trimmers is 0.7 and the probability of a favorable survey result given an unsuccessful market for beard trimmers is 0.2. In addition, the probability of an unfavorable pilot study given an unfavorable market is 0.9, and the probability of an unsuccessful pilot study result given a favorable market for beard trimmers is[0.2. Make a decision tree for this problem and find the maximum EMV. Also, find the EVSI. a Answer: Max EMV is with Survey = RO 19,328. = EVSI = Max EMV with Survey + Money spent on Survey Max EMV neither Survey nor Pilot study - EVSI = RO 19,328 + RO 4,000 - RO 16,000 = RO 7328 = =

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