The Collector’s Choice Inc. ( CCI), a luxury car import company, has an old warehouse at the Port of Miami, Florida, where it temporarily stores expensive sports cars and automotive parts that arrive from Europe. This summer, CCI has noticed that the termite infestation in the warehouse has escalated to a point where tenting cannot be postponed anymore. (Tenting is the process of wrapping a building inside a huge tent that is subsequently filled with a poisonous gas capable of killing most forms of life inside, including insects, plants, pets, and human beings.) CCI’s pest control company’s contract specifies a to- do list of pre- tenting tasks, which include:
1. Create a decision tree analysis to help decide whether Alex Ferrari should hire Pro Guard’s services.
2. Come up with a simple rule of thumb that can be applied to decisions of this nature, given any deductible amount d, extra surveil-lance cost c, and burglary probabilities p1 (without surveillance) and p2 (with surveillance).
3. Does your decision based on the tree guarantee success? Why or why not?