The symbols at and a2 represent the "favorable" and "unfavorable" assessment by the broker, and 5J, 52, and 53 represent, respectively, the up, same, and down change in future prices.

(a) Draw the associated decision tree.

(b) Specify the optimal decision for the problem.

In Problem 5, Set 13.2a, suppose that AFC management has decided to test-market its Wings 'N Things in selective locations. The outcome of the test is either "good" (a I) or

"bad" (a2)' The test yields the following conditional probabilities with and without the advertising campaign:

The symbols Vt and ~ represent "success" and "no success," and WI and W2 represent "receptive"
and "not receptive."

(a) Develop the associated decision tree.

Transcribed Image Text:

12 P{alv)-With campaign a P{alw}-No campaign a .95 .05 201 .8 2 .3 _7 202 .4 .6