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business analytics Consider the following Scenario to answer Questions 1-2: Potsdam development committee is considering two candidates for new development in the town. The distance
business analytics
Consider the following Scenario to answer Questions 1-2: Potsdam development committee is considering two candidates for new development in the town. The distance from Potsdam to larger markets and limited air service have hindered the down in attracting new industry. Air Express, a major overnight delivery service is considering establishing a regional distribution center in Potsdam. However, Air Express will not establish the center unless the length of the runway at the local airport is increased. Another candidate for new development is Diagnostic Research, Inc. (DRI), a leading producer of medical testing equipment. DRI is considering building a new manufacturing plant. Increasing the length of the runway is not a requirement for DRI, but the planning commission feels that doing so will help convince DRI to locate their new plant in Potsdam. Assuming that the town lengthens the runway, the Potsdam planning commission believes that the probabilities shown in the following table are applicable: (some numbers are intentionally left as ? for you to calculate). DRI Plant No DRI Plant Air Express Center 0.30 ? 0.40 No Air Express Center ? For instance, the probability that Air Express will establish a distribution center and DRI will build a plant is 0.30. the probability that Air Express will establish a distribution center is 0.4. We also know that if Air Express does not establish a distribution center, the probability that DRI will build a plant is 0.66. The estimated annual revenue to the town, after deducting the cost of lengthening the runway, is as follows: DRI Plant No DRI Plant Air Express Center $600,000 $150,000 G as follows: DRI Plant No DRI Plant Air Express Center $600,000 $150,000 No Air Express Center $250,000 -$200,000 If the runway expansion project is not conducted, the planning commission assess the probability DRI will locate their new plant in Potsdam at 0.6; in this case, the estimated annual revenue to the town will be $450,000. If the runway expansion project is not conducted and DRI does not locate Potsdam, the annual revenue will be $0 because no cost will have been incurred and no revenues will be forthcoming. Question 1 10 pts Draw the decision tree for Potsdam and upload a picture of it here. Include all probabilities and payoffs in the proper place. Upload Choose a File D D will be forthcoming. Question 1 10 pts Draw the decision tree for Potsdam and upload a picture of it here. Include all probabilities and payoffs in the proper place. Upload Choose a File Question 2 5 pts What is the probability that Air Express establishes a distribution center given that DRI decides not to build a plant? 0.66 0,25 O 0.33 O 04 Step by Step Solution
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