Using the decision tree to answer questions

1. What is the expected value at node 2?

a. 600

b. 620

c. 640

d. 660

2. What is the expected value at node 4?

a. 460

b. 560

c. 500

d. 480

3. What is the expected value at node 5?

a. 800

b. 1000

c. 1220

d. 1120

4. What is the expected value at node 3?

a. 824

b. 724

c. 800

d. 744

5. Using the expected value approach, what is your recommended decision?

a. Space Pirates

b. Battles Pacific

c. Both Space Pirates and Battle Pacific

d. Neither Space Pirates nor Battles Pacific

Video Tech is considering marketing one of two new video games for the coming holiday season: Battle Pacific or Space Pirates, Battle Pacific is a unique game and appears to have no competition. Video Tech is optimistic about its Space Pirates game. However, the concern is that profitability will be affected by a competitor's introduction of a video game viewed as similar to Space Pirates. Estimated profits (in thousands of dollars) are given at the ending branches of the decision tree. High 0.2 1000 Battle Pacific Medium 0.5 700 Low 0.3 1 300 High 0.3 800 With Competition 0.6 Medium 0.4 400 Low 0.3 200 Space Pirates High 0.5 H 1600 Without Competition 0.4 Medium 0.3 800 Low 0.2 400