A company is developing a new cell phone and has two models under consideration, Model 1 andModel 2. Market research indicates that 70% of the new phone have a high consumer demand and30% have a 30% low consumer demand. Model 1Model 2 Investment Required $ 200,000 $ 175,000 Revenue for High Demand $ 500,000 $ 160,000 Revenue for Low Demand $ 450,000 $ 160,000 Develop a decision tree to find the best model

Answered: A company is developing a new cell…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 17.1IP

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A company is developing a new cell phone and has two models under consideration, Model 1 and
Model 2. Market research indicates that 70% of the new phone have a high consumer demand and
30% have a 30% low consumer demand.
	Model 1	Model 2
Investment Required	$ 200,000	$ 175,000
Revenue for High Demand	$ 500,000	$ 160,000
Revenue for Low Demand	$ 450,000	$ 160,000

Develop a decision tree to find the best model

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Step 1a1

introduction:

a decision tree is a stretching set of rules used to order a record, or anticipate a consistent value for a record. ... The tree isn't determined by any automatic cycle but instead is drawn by, expected expert probabilities to the results of the choices.

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