Given Data:

Profit = 800000 of project completion on deadline

Penalty cost for not completing on deadline = 250000

The probability of completing the project on time = 0.4 due to a contractor not delivering an important part

overtime work is an attempt to increase the probability of project completion on time to 0.64 but it cost 100000

if the project isn't completed on time the company can sue the contractor. legal action cost = 50000 and 0.2 to be successful

if legal action is successful the contractor will pay 300000 but if it fails the company pays 30000 to the contractor

1. Draw a decision tree that models the problem facing the company and use it to chose the policy that will make them maximise the Expected Monetary Value

2. Assume that whenever the project can be completed on time without the use of overtime, it can also be completed on time with the use of overtime. What is the expected value of perfect information on:

a) if the legal action will be successful?

b) if the project will be completed on time with overtime?

3. Suppose now that the contractor legal costs are not known. For what range of values for the contractors legal costs is the policy determined in part 1 as optimal?