Question
How would I conduct a decision tree from the following information and analyze the risk associated with the decision by calculate the probability distribution of
How would I conduct a decision tree from the following information and analyze the risk associated with the decision by calculate the probability distribution of the recommended decision strategy
Martin's Service Station is considering entering the snowplowing business for the coming winter season. Martin can purchase either a snowplow blade attachment for the station's pick-up truck or a new heavy-duty snowplow truck. After analyzing the situation, Martin believes that either alternative would be a profitable investment if the snowfall is heavy. Smaller profits would result if the snowfall is moderate, and losses would result if the snowfall is light. The following profits/losses apply.
State of Nature Decision Alternatives Heavy, $1 Moderate, $2 Light, $3 Blade attachment S 3,500 1,000 -$1,500 New snowplow S 7,000 2,000 -$9,000P(N) = .8 P(S] [N) = .35 P(5 \\ U) = .62 P(U) = .2 P(S, N) = .30 P(s, U) = .31 P(S, N) = .35 P($, U) = .07Step by Step Solution
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