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 following table shows the expected costs of the two options for three possible demand levels: L01 STATES OF NATURE ALTERNATIVES LOW DEMAND MEDIUM DEMAND HIGH DEMAND Hire full-time $300 $500 $ 700 Hire part-time $ 0 $350 $1,000 Probabilities .2 .5 .3

a) Using expected value, what should Ms. Johnson do?

b) Draw an appropriate decision tree showing payoffs and probabilities.