Video Tech is considering marketing one of two new video games for the coming holiday season: Battle Pacific or Space Pirates. Battle Pacific is a unique game and appears to have no competition. Estimated profits (in thousands of dollars) under high, medium, and low demand are as follows:

	Demand
Battle Pacific	High	Medium	Low
Profit	$1,000	$700	$300
Probability	0.2	0.5	0.3

Video Tech is optimistic about its Space Pirates game. However, the concern is that profitability will be affected by a competitors introduction of a video game viewed as similar to Space Pirates. Estimated profits (in thousands of dollars) with and without competition are as follows:

Space Pirates	Demand
With Competition	High	Medium	Low
Profit	$600	$300	$150
Probability	0.3	0.4	0.3

Space Pirates	Demand
Without Competition	High	Medium	Low
Profit	$1,200	$600	$300
Probability	0.5	0.3	0.2

For planning purposes, Video Tech believes there is a 0.3 probability that its competitor will produce a new game similar to Space Pirates.

(a)

Develop a decision tree for the Video Tech problem. Select the correct graph. All profit values are in thousands of dollars.

(i)
(ii)
(iii)
(iv)

- Select your answer -Graph (i)Graph (ii)Graph (iii)Graph (iv)Item 1

(b)

Using expected value, what is your recommended decision?

- Select your answer -Space PiratesBattle PacificItem 2

(c)

Show a risk profile for your recommended decision. Select the correct graph. All profit values are in thousands of dollars.

(i)		(ii)
(iii)		(iv)

- Select your answer -Graph (i)Graph (ii)Graph (iii)Graph (iv)

(d)

Use sensitivity analysis to determine what the probability of competition for Space Pirates would have to be for you to be indifferent to the recommended decision alternative. If required, round your answer to three decimal places.