please answer the following two questions
Bellies?' Question 2 - Decision Analysis (20 marks) The board of directors (BOD) is considering whether or not to construct a processing plant in Darwin, Northern Territory. Pork Bellies will have an arrangement with the council to use the port for 5 years at a rate of 50% on normal cost and after that the cost will increase 175%. If demand is favourable, Pork Bellies will realise a net prot of $2,000,000 after the 5 years. If the market is not favourable, then they could lose $800,000. At this stage there is no reliable data on how successful the project could be. The board of directors are working on a 50-50 chance that the processing plant will be successful. 1. Construct a decision tree to analyse the problem. What should the BOD do, justify your answer? (5 marks) 2. The BOD are not condent with a 50-50 approach and have decided to employ a research rm who specialise in Bayesian Theorem to conduct a study on the viability of constructing a processing plant. The study will cost $10,000 and will work on the following statements of probability: Probability of a favourable market given a favourable study = 0.72 Probability of an unfavourable market given a favourable study = 0.28 Probability of a favourable market given an unfavourable study = 0.21 Probability of unfavourable market given an unfavourable study : 0.79 Probability of a favourable research study = 0.55 Probability of an unfavourable research study = 0.45 a. Develop a decision tree to reect the new alternatives. (2 marks) b. Using the EMV approach, recommend a strategy that BOD should take. In your response discuss the alternatives. (4 marks) c. Using the expected value of sample information, how much would the BOD be prepared to pay for the study? (4 marks) d. What other information would the BOD want to help in making their decision? (5 marks) Question 3 Simulation (10 marks) Question 3 Simulation Pork Bellies is concerned that not enough space has been allocated for ships to dock and load a uickl . You have been asked to create a simulation based on the following information: Hours between Relative arrivals frequency = __ __ Hours Relative to frequency l-oad3 m-m NI The port works 7 days a week and 24 hours a day. Required: a) Using a table of random numbers simulate 2 weeks where only I ship can dock and load at a time. (5 marks) b) Based on your results, should Pork Bellies try to acquire a second dock to unload? Justify your answer by discussing the results of the simulation, taking into considering other factors that will impact the decision
