Leah Johnson, director of Urgent Care of Brookline, wants to increase capacity to provide low- cost flu shots but must decide whether to do so by hiring another full- time nurse or by using part- time nurses. The table below shows the expected costs of the two options for three possible demand levels:

a) Using expected value, what should Ms. Johnson do?
b) Draw an appropriate decision tree showing payoffs andprobabilities.

Transcribed Image Text:

STATES OF NATURE LOW MEDIUM HIGH ALTERNATIVES Hire full-time Hire part-time Probabilities DEMAND 300 S 0 DEMAND 5500 S350 DEMAND 700 $1,000 .2 5