Question
Part C The questions in this section are independent of Part A and Part B. The scenario is the same but the values are
Part C The questions in this section are independent of Part A and Part B. The scenario is the same but the values are different. Senior management at Humber bakery requested a new analysis based on adjusting the selling price and the number of units produced under each production plan. Initial probability estimates are also updated. Resulting gross profits ($) and state of nature probabilities are given in the following payoff table. Low Demand Medium Demand | High Demand Light Production Moderate 24,800 45,600 45,600 11,240 57,000 57,000 Production Heavy Production -22,660 27,260 85,500 Probability 0.1 0.4 0.5 The new analysis also necessitated updating the offer made to Bramptinos under the heavy production plan. If Humber chooses the heavy production plan, the probability that Bramptinos will accept the new offer is 23% and the associated gross profit is determined to be $81,000. Again here, if Bramptinos declines the offer, the loaves will still sell based on current demand conditions (low, medium, or high). Use the decision tree you selected from Part A, along with the payoffs and probabilities provided on this page, to construct a decision tree for the problem. I. No Sample Information What is the expected monetary value and associated decision for the optimal alternative? Max EMV = $ The optimal decision is [Select an answer production. II. Sample Information As noted earlier, Humber is considering hiring Professor Leung to conduct a market research survey. It is now determined that the results of the survey will indicate an unfavourable market condition with 42% chance. Otherwise, it will indicate a favourable market condition. If the survey provides a favourable outlook, the revised probabilities of medium and high demand are 0.37 and 0.42 respectively. If unfavourable, the probabilities calculated for low and high demand are 0.37 and 0.31 respectively. Using the given sample information, create a multistage decision tree based on the tree you selected in Part A (lla). Solve the tree.
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