Question 3:

SIMSOX is interested in a video game development project called Ospry for Devil Dust

Entertainment Pty (DDE). The cost of software development is estimated $300,000.

SIMSOX is considering 3 possible price propositions of $410,000; $450,000 and

$470,000. There is 20% chance that SIMSOX can negotiate with DDE and come to an

agreement about the price and sign the contract. If the agreement couldn't be reached the

project will be taken to the public tender. In this case, the tender documents should be

purchased and completed for $25,000. According to the market research, 30% of

competitors are likely to place bid less than $410,000. There is 15% chance that

competitors place bid between $410,000 and $450,000 and 35% of competitors place bid

between $450,000 and $470,000

a)

Develop a decision tree for the above problem manually.

b)

Using the Expected Monetary Value (EMV) technique find out the best possible

option. Show your workings.

c)

Solve the above question using precision tree and provide related screen shots