Question
Please help about Decision making with sample information. Extreme Drilling is faced with a two-tiered decision problem: Should it make a blind decision on whether
Please help about Decision making with sample information.
Extreme Drilling is faced with a two-tiered decision problem: Should it make a blind decision on whether or not to drill in a particular location in the Fullerton oil field in Texas, or should it invest in seismic data before making the drilling decision? Extreme Drilling's situation is typical in the oil industry, as advances in seismic technology and reservoir modeling have resulted in more detailed and more accurate, albeit imperfect, information from seismic surveys.(Stephen Pickering and J. Eric Bickel explain how seismic data is used in the oil industry in "The Value of Seismic Information,"Oil and Gas Financial Journal, May 2006.)Extreme Drilling's decision problem is captured in the following incomplete decision tree:
Extreme Drilling's decision problem is captured in the following incomplete decision tree: Oil I C Drill 6 Water Reports Oil 3 D A Don't Drill K Seismic Survey Oil E L Drill 7 Water Reports Water M 4 F B Don't Drill N 1 Oil O Drill G 8 Water P No Seismic Survey 5 H Don't DrillStep by Step Solution
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