what type of information you need can you please update
can you check the decision trees which i have done for question 1 and 2. please tell me how to do.
you donot need to consider that normal cost and increasing cost thats a mistake question. can you do now
this question is exactly like this which i found in chegg. this is answerd and i an amazed why i am not getting answer.
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 profit 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 confident with a 50-50 approach and have decided to employ a research firm 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 reflect 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) PORK BELLIES Pty Ltd - Background Pork Bellies was established in 1930 by Shawn Lamb in Walgett; Shawn's granddaughter Brooke River took over as managing director in 2011. The company is currently ranked 185 in the top 500 privately owned companies in Australia. In 2019 Pork Bellies employed over 800 staff, with major operating centres located in Melbourne, Sydney and the Albury/Wodonga region. Pork Belies is the fourth largest company in Australia that farms and processes pork with sales of $462.7 million. Major customers include supermarkets, butchers and caterers. Quality is something Pork Bellies is very particular about and in 2001 it was accredited with ISO 9002 across all farming and processing functions, including processing, distribution and feeding of livestock. ISO 9002 certification was also accredited for administration processes of purchasing, training product control, product traceability and process improvement. The Hazard Analysis Critical Control Points (HACCP) food safety system was also adopted, further highlighting Pork Bellies commitment to quality control and safety. The global pork meat farming and processing industry Pork consumption has consistently increased upwards in recent years in Australia and internationally. On a global basis, pork meat accounts for about 25% of total meat consumption, third only to chicken and beef. The table below summaries pork consumption over the last few years. Table 1 Pork meat consumption per capita in selected locations (kg/per capita) 2014 2015 2016 2017 2018 2019 41.6 41.3 41.7 43.8 44.0 44.3 China UK 23.2 23.1 24.8 25.1 25.4 25.7 USA 28.6 28.4 30.6 36.2 35.9 36.8 Brazil 44.9 46.9 52.7 50.9 51.2 51.2 29.3 Australia 24.1 25.3 27.2 28.1 29.0 With the consumption of pork rising around the world, it has resulted in the need for production to increase at the same rate. Recent years trends are showing that countries are working towards becoming more self-sufficient in providing meat for their own consumption. More recently, China and Brazil have enjoyed enormous growth in pork production and overtaken the US which had traditionally been the highest producer of pork Size and growth In 2019, about 955,000 tonnes of pork with a retail value of approximately $4.2 billion was consumed. Historically, the industry has not been responsive to changes in demand, with production generally constant with a minor peak around Christmas time. There have been limited fluctuations in price and profitability. In addition, unlike other livestock producers, pork farmers were unable to change to alternative livestock when demand declined due to the specialised nature of pork farming and the equipment required for housing the pigs. As a result, a high focus on efficiency throughout the industry has resulted in intensive animal rearing operations through efficient feed utilisation and optimised productivity. This has enabled lower price rises at the retail end than for other livestock, with pork prices increasing by only 147% from 1972 to 2014, compared with 230% for most other meats. Con Sucessful Not To Sucessful Ems 100,00 fuo sabe Makel(2) favotreble neared 60-21) Noi. DI EM US-$400,000 construct opo Total EMU= Emu of sucessful + EMU of unsucess 2001000X0-507-808) ovox O-SD - $100.000 + (-400, ovo) - $300,000 (O 2800 (2) $724 2) In facetembre Merker 1000 sucessful O $2100 construct Coy - $7500 cins ylessful Marko &- qeseard DI Not $5500 - Construct BAS $450 8:59 part A and B is given: Solutio... vers to part C and D. Solution for part 1: -26 A group of medical professionals is considering con- structing a private clinic. If patient demand for the clinic is high, the physicians could realize a net profit of $100,000. If the demand is low, they could lose $40,000. Of course, they don't have to proceed at all, in which case there is no cost. In the absence of any market data, the best the physicians can guess is that there is a 50-50 chance that demand will be good. (a) Construct a decision tree to help analyze this problem. What should the medical professionals do? (b) The physicians have been approached by a mar- ket research firm that offers to perform a study of the market at a fee of $5,000. The market researchers claim that their experience enables them to use Bayes' theorem to make the follow- ing statements of probability: probability of high demand given a positive study result = 0.82 probability of low demand given a positive study result = 0.18 probability of high demand given a negative study result - 0.11 probability of low demand given a negative study result = 0.89 probability of a positive study result probability of a negative study result = 0.45 Expand the decision tree in part (a) to reflect the op- tions now open with the market study. What should the medical professionals do now? (c) What is the maximum amount the physicians would be willing to pay for the market study? = 0.55 ER 2. DECISION ANALYSIS What is the efficiency of the market 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 profit 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 confident with a 50-50 approach and have decided to employ a research firm 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 reflect 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) PORK BELLIES Pty Ltd - Background Pork Bellies was established in 1930 by Shawn Lamb in Walgett; Shawn's granddaughter Brooke River took over as managing director in 2011. The company is currently ranked 185 in the top 500 privately owned companies in Australia. In 2019 Pork Bellies employed over 800 staff, with major operating centres located in Melbourne, Sydney and the Albury/Wodonga region. Pork Belies is the fourth largest company in Australia that farms and processes pork with sales of $462.7 million. Major customers include supermarkets, butchers and caterers. Quality is something Pork Bellies is very particular about and in 2001 it was accredited with ISO 9002 across all farming and processing functions, including processing, distribution and feeding of livestock. ISO 9002 certification was also accredited for administration processes of purchasing, training product control, product traceability and process improvement. The Hazard Analysis Critical Control Points (HACCP) food safety system was also adopted, further highlighting Pork Bellies commitment to quality control and safety. The global pork meat farming and processing industry Pork consumption has consistently increased upwards in recent years in Australia and internationally. On a global basis, pork meat accounts for about 25% of total meat consumption, third only to chicken and beef. The table below summaries pork consumption over the last few years. Table 1 Pork meat consumption per capita in selected locations (kg/per capita) 2014 2015 2016 2017 2018 2019 41.6 41.3 41.7 43.8 44.0 44.3 China UK 23.2 23.1 24.8 25.1 25.4 25.7 USA 28.6 28.4 30.6 36.2 35.9 36.8 Brazil 44.9 46.9 52.7 50.9 51.2 51.2 29.3 Australia 24.1 25.3 27.2 28.1 29.0 With the consumption of pork rising around the world, it has resulted in the need for production to increase at the same rate. Recent years trends are showing that countries are working towards becoming more self-sufficient in providing meat for their own consumption. More recently, China and Brazil have enjoyed enormous growth in pork production and overtaken the US which had traditionally been the highest producer of pork Size and growth In 2019, about 955,000 tonnes of pork with a retail value of approximately $4.2 billion was consumed. Historically, the industry has not been responsive to changes in demand, with production generally constant with a minor peak around Christmas time. There have been limited fluctuations in price and profitability. In addition, unlike other livestock producers, pork farmers were unable to change to alternative livestock when demand declined due to the specialised nature of pork farming and the equipment required for housing the pigs. As a result, a high focus on efficiency throughout the industry has resulted in intensive animal rearing operations through efficient feed utilisation and optimised productivity. This has enabled lower price rises at the retail end than for other livestock, with pork prices increasing by only 147% from 1972 to 2014, compared with 230% for most other meats. Con Sucessful Not To Sucessful Ems 100,00 fuo sabe Makel(2) favotreble neared 60-21) Noi. DI EM US-$400,000 construct opo Total EMU= Emu of sucessful + EMU of unsucess 2001000X0-507-808) ovox O-SD - $100.000 + (-400, ovo) - $300,000 (O 2800 (2) $724 2) In facetembre Merker 1000 sucessful O $2100 construct Coy - $7500 cins ylessful Marko &- qeseard DI Not $5500 - Construct BAS $450 8:59 part A and B is given: Solutio... vers to part C and D. Solution for part 1: -26 A group of medical professionals is considering con- structing a private clinic. If patient demand for the clinic is high, the physicians could realize a net profit of $100,000. If the demand is low, they could lose $40,000. Of course, they don't have to proceed at all, in which case there is no cost. In the absence of any market data, the best the physicians can guess is that there is a 50-50 chance that demand will be good. (a) Construct a decision tree to help analyze this problem. What should the medical professionals do? (b) The physicians have been approached by a mar- ket research firm that offers to perform a study of the market at a fee of $5,000. The market researchers claim that their experience enables them to use Bayes' theorem to make the follow- ing statements of probability: probability of high demand given a positive study result = 0.82 probability of low demand given a positive study result = 0.18 probability of high demand given a negative study result - 0.11 probability of low demand given a negative study result = 0.89 probability of a positive study result probability of a negative study result = 0.45 Expand the decision tree in part (a) to reflect the op- tions now open with the market study. What should the medical professionals do now? (c) What is the maximum amount the physicians would be willing to pay for the market study? = 0.55 ER 2. DECISION ANALYSIS What is the efficiency of the market
