Hale's TV Production is considering producing pilot for a comedy series in the hope of selling it to a major television network. The network may decide to reject the series, but it may wo decide to purchase the rights to the series for either one or two years. At this point in time, ale may either produce the pilot and wait for the network's decision or transfer the rights for the print and series to competitor for $100,000. Hale's decision alternatives and profits in thousands of dollars) are as follows: State of Nature Decision Alternative Rejects 1 Year, 2 Years, Produce pilota -100 50 150 Sell to competitor, 100 100 100 The probabilities for the states of nature are PC) -0.1878, PC) -0.3210, and Psy) - 4912. For a consulting fee of $5,000, an agency will review the plans for the comedy series and indicate the overal changes of a favorable network reaction to the series. Assume that the agency review will result in a favorable or an unfavorable () review and that the following probabilities are relevant POU-0.69 PU) -0.31 P - 0.07 P = 0.29 -0.64 Pau) - 645 PEU) - 0.9 Pts, 10) - 0.16 (a) Construct a decision tree for this problem. (Enter your answers thousands of dollars.) Decision Tree Description d 51 52 53 F 3 d si S2 53 Agency S1 S2 S3 00 d si 52 53 II III III 1 s, S2 d 10 No Agency 5 d $1 S2 NI 11 a) Construct a decision tree for this problem. (Enter your answers in thousands of dollars.) Decision Tree Description A decision tree begins at decision node 1 and an upper and lower branch extend from this node to the right. The upper branch, labeled Agency, stops at chance node 2 and an upper and lower branch extend from this node to the right. The lower branch, labeled "No Agency, stops at decision nodes and an upper and lower branch extend from this node to the night. The upper branch extending from chance node 2, labeled , stops at decision node 3 and an upper and lower branch extend from this node to the right. The lower branch, labeled U, stops at decision node 4 and an upper and lower branch extend from this node to the right The upper branch extending from decision node 3, labeled d., stops at chance node 6 and the lower branch, labeled dy, stops at chance node 7. The upper branch extending from decision node 4, labeled de stops at chance node 8 and the lower branch, tabeled dy, stops at chance node 9. The upper branch extending from decision node 5, labeled d,,stops at chance node 10 and the lower branch, labeled dy, stops at chance node 11. From top to bottom, the nodes farthest to the right of the tree are chance nodes 6, 7, 8, 9, 10, and 11. Each node has an upper, middle, and lower branch that extends from the node to the right labeled S, S, and s, respectively. There is an answer blank at the end of each branch (b) What is the recommended decision if the agency opinion is not used? O produce pilot, d, sell to competitor, dy What is the expected value (in thousands of dollars)? thousand dollars (e) What is the expected value of perfect information (In thousands of dollars)? thousand dollars (d) What is Hale's optimal decision strategy assuming the agency's Information is used? If favorable, produce If unfavorable, sell (e) What is the expected value (in thousands of dollars) of the agency's Information? (Round your answer to two decimal places.) 101,035 X thousand dollars Is the agency's Information worth the $5,000 fee? Yes No What is the maximum that Hale should be willing to pay in thousands of dollars) for the information? (Round your answer to two decimal places.) thousand dollars (9) What is the recommended decision? Agency; if unfavorable, sell to competitor Agency; if favorable, produce the pilot No agency; sell to competitor No agency, produce the pilot X