Quanitive Analysis: Decision Trees and Decision Making

Decision Trees and Decision Making
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Decision trees and decision making
Part A
Expected values occur when there is an averaging process with numerous alternatives. It is the aggregate of the product of probability and value of individual outcomes. In essence the expected value is a decision criterion after evaluating the possible outcomes (Lucey, 2003). Under conditions of uncertainty decisions cannot be made subjectively. Thus, quantifying decision alternatives by way probabilistic values, estimated values of outcomes and the depiction of decision trees are essential steps in decision making.
Developing thoroughly: Expected value is ($ 500, 000*0.4) + ($ 25000* 0.4) + (1, 000* 0.2)
=$ 210,200
Developing rapidly: Expected value is ($ 5000, 000* 0.1) + ($25,000* 0.2) + ($1,000* 0.7)
=$55,700
Strengthening the product: Expected Value is ($200,000* 0.3) + ($10,000* 0.4) + ($3,000* 0.3) =$ 64,900
Reap without investing: Expected...