A pharmaceutical company, Zastramod, (Z), are attempting to produce a ‘suitably effective covid vaccine’ (SECV) which will be more effective than existing vaccines. Z’s directors decide that there are three research strategies they can follow: a ‘traditional’(T), ‘modified’ (M) or ‘adventurous’ (A) strategy. If T is chosen the researchers must then decide whether to use a ‘liveattenuated’ (L) or ‘inactivated’ (I) approach. If L is chosen, the researchers believe that there is a 0.2 chance that a SECV could be produced in 2 months and a 0.8 chance that it would take 12 months. If I is chosen, the researchers believe that there is a 0.5 chance that a SECV will be produced in 6 months and a 0.5 chance that it will take 15 months. If research strategy M is selected, the directors must decide whether to use a ‘subunit’ (S) or ‘toxoid’ (X) approach. If the S approach is adopted their researchers estimate that there is an equal chance of a SECV being produced in 8 and 10 months. If the X approach is used then the directors must decide which of two laboratories to use (C or D). If C is used then researchers estimate that a SECV may take 8 or 12 months to produce, with probabilities 0.6 and 0.4, respectively. If D is used then researchers believe it could take 3 or 14 months to produce a SECV, but they do not feel able to estimate the related probabilities. If research strategy A is selected, the directors of Zastramod believe that there is a 0.6 chance that a new data collection technique may be able to be employed. If this is the case, then the researchers believe that there is a 0.2 chance that a SECV could be produced in 2 months and a 0.8 chance that it will take 8 months. If the new data collection technique cannot be employed then the researchers believe that a SECV would be produced in 8 or 13 months with probabilities of 0.1 and 0.9, respectively. 

a) Draw the decision tree which is needed to help the directors of Zastramod decide which research strategy it should adopt [NO CALCULATION REQUIRED]. 

b) Write notes on the advantages of decision trees for this type of analysis. 

c) If Zastramod’s aim is to minimise the expected time to produce a SECV, determine under what circumstances they would decide to select strategy D. 

d) Taking account of costs, Zastramod now decide to adopt research strategy T, and to use the Markowitz risk return model to make their decision of whether to adopt approaches L or I

 Determine how risk averse Zastramod’s directors must be for them to decide to adopt strategy I. 

e) Discuss any limitations of the analyses conducted in (a), (c) and (d) and how these limitations might be overcome.