Problem 13-16 (Algorithmic)

The company must first decide whether to undertake the market research study. If the market research study is conducted, the outcome will either be favorable (F) or unfavorable (U). Assume there are only two decision alternatives,d1andd2, and two states of nature,s1ands2. The payoff table showing profit is as follows:

\fa. Choose the correct decision tree for this problem. (i) Profit (ii) Profit Payoff Payoff 200 200 $1 700 500 52 d2 F F 500 700 51 d1 d2 400 $2 400 $2 d2 Market Market Research O Research O 200 200 $1 d1 d1 700 500 $2 d2 U 500 700 $1 Ip d2 400 $2 400 $2 d2 200 200 $1 d1 d1 700 500 $2 No Market No Market Research Research 500 700 $1 d2 400 $2 400 $2 d2\f\fNo Market Research. Decision 1 No Market Research. Decision 2 Market Research. If Favorable, decision 1 and if Unfavorable, decision 1 Market Research. If Favorable, decision 1 and if Unfavorable, decision 2 Market Research. If Favorable, decision 2 and if Unfavorable, decision 1 Market Research. If Favorable, decision 2 and if Unfavorable, decision 2