The manager of an events-organising business has to decide between holding a fund-raising auction indoors or...

 

 

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The manager of an events-organising business has to decide between holding a fund-raising auction indoors or outdoors. The financial success of the event depends not only on the weather but also on the decision to hold it indoors or outdoors. The table below shows the expected net financial returns or pay-offs from the event for each of these different circumstances. Weather Fine Poor Indoors Outdoors $5,000 $10,000 $7,000 $4,000 From past weather records there is a 60% chance of fine weather and a 40% chance of it being poor. The indoor event will cost $2,000 to arrange and the outdoor event will cost $3,000. Draw a decision tree to illustrate the decision being made and whether the manager should hold the event indoors or outdoors. The manager of an events-organising business has to decide between holding a fund-raising auction indoors or outdoors. The financial success of the event depends not only on the weather but also on the decision to hold it indoors or outdoors. The table below shows the expected net financial returns or pay-offs from the event for each of these different circumstances. Weather Fine Poor Indoors Outdoors $5,000 $10,000 $7,000 $4,000 From past weather records there is a 60% chance of fine weather and a 40% chance of it being poor. The indoor event will cost $2,000 to arrange and the outdoor event will cost $3,000. Draw a decision tree to illustrate the decision being made and whether the manager should hold the event indoors or outdoors.