Question: Please help me to solve these two questions. Qs 2: Solve part b for this Analyze the decision tree in the figure to the right.

Please help me to solve these two questions.

Please help me to solve these two questions. QsQs 2: Solve part b for this

Please help me to solve these two questions. Qs

Please help me to solve these two questions. Qs

Analyze the decision tree in the figure to the right. What is the expected payoff for the best alternative? First, be sure to infer the missing probabilities. 10 61 $22 The expected payoff is $ (Enter your response rounded to the nearest penny.) $29 Alternative 1 $23 Alternative 2 [0.6) $27 $22 10.51 $29 [0.1) $26 [0.3] $23 ALLAH The probability of low demand is estimated to be 0.30. The after-tax net present value of the benefits from purchasing the two machines together is $70,000 if demand is low and $170,000 if demand is high. If one machine is purchased and demand is low, the net present value is $120,000. If demand is high, the manager has three options. Doing nothing has a net present value of $100,000; subcontracting, $150,000, and buying the second machine, $130,000. a. Choose the correct decision tree for this problem. Note that each payoff is given in thousands of dollars. . B. Low demand 100 Buy 1 machine High demand 70 Do nothing Subcontract Buy 2 120 machines Buy 1 machine Low demand - 120 Do nothing 0.30 High demand Subcontract 0.70 Buy 2 Low demand -70 machines 0.30 High demand 170 0.70 Low demand 130 Buy 2 machines Buy 2 machines High demand 170 . OD. b. How many machines should the company buy initially? What is the expected payoff for this alternative? Best decision is to buy machine(s) and its expected payoff is $ . (Enter your responses as integers.)

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