5. Determine the course of action that has the highest expected payoff for this decision tree.$1.0*$1.3Do nothingMedium demand (.5)Large demand (.1)Small demand (.4)Expand$1.3Do nothingExpand$1.5$1.6Build$1.8Do nothingOther use #1$0.7$1.5Small demand (.4)Medium demand (.5)Other use #2$1.0Expand$1.6Large demand (.1)Do nothingSubcontract$1.6$1.5Build$1.7($0.9)Do nothingOther use #1Small demand (.4)Medium demand (.5),$1.4Other use #2$1.0$1.0Large demand (.1)Do nothingOther use #1$1.1Other use #2$0.9* Net present value in millions$2.4SubcontractBuild 1.The following solved problems refer to this payoff table:NewNoBridgeBuiltNewBridgeAlternative capacityA114for new store21046where A = small, B = medium, and C = large.Assume the payoffs represent profits. Determine the alternative that would be chosen under each ofthese decision criteria:a. Maximin.b. Маximax.c. Laplace.2.Using the information in the payoff table, develop a table of regrets, and thena. Determine the alternative that would be chosen under minimax regret.b. Determine the expected value of perfect information using the regret table, assuming that theprobability of a new bridge being built is .60.3.Using the probabilities of .60 for a new bridge and .40 for no new bridge,a. Compute the expected value of each alternative in the payoff table, and identify the alternativethat would be selected under the expected-value approach.b. Construct a decision tree for the problem showing expected values.Compute the EVPI using the information from the previous problem.4.

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Description: 5. Determine the course of action that has the highest expected payoff for this decision tree.$1.0*$1.3Do nothingMedium demand (.5)Large demand (.1)Small demand (.4)Expand$1.3Do nothingExpand$1.5$1.6Build$1.8Do nothingOther use #1$0.7$1.5Small deman

In the subject of game theory we can make use of a game tree of outcomes to determine the best…

Answered: 5. Determine the course of action that…

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5. Determine the course of action that has the highest expected payoff for this decision tree.

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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