Question: The Extron Oil Company is considering making a bid for a shale oil development contract to be awarded by the federal government. The company has
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The cost of preparing the contract proposal is $2,000,000. If the company does not make a bid, it will invest in an alternative venture with a guaranteed profit of $30 million. Construct a sequential decision tree for this decision situation and determine whether the company should make abid.
Develop New Process Prbbyrof Inilins Outcomes Great success Moderate success Failure 0.30 0.60 0.10 $600 300 -100 Use Present Process ProbabilityProfit (millions) Outcomes Great success Moderate success Failure 0.50 0.30 0.20 $300 200 -40 Outcomes Moderate success Subcontract Probability 1.00 Profit (millions) $250
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142 Bid 1 Contract awarded 112 040 Make ... View full answer
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