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Applying the decision tree algorithm, determine and advice Koki Nkoana on the best decision to make?

Applying the decision tree algorithm, determine and advice Koki Nkoana on the best decision to make?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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c) Koki Nkoana is a writer of romance novels. A movie company and a TV network both want exclusive rights to one of her more popular works. If she signs with the network, she will receive a single lump sum, but if she signs with the movie company, the amount she will receive depends on the market response to her movie. Table 3 presents the payoff matrix (in '000) for Jenny Lind. Table 3: Profit matrix States of Nature Small Box Medium Box Large Box Decisions Office Office Office Sign with Movie Company R200 R1000 3000 Sign with TV Network R900 R900 R900 Prior Probabilities 0.3 0.6 0.1 Applying the decision tree algorithm, determine and advice Koki Nkoana on the best decision to make?
Transcribed Image Text:c) Koki Nkoana is a writer of romance novels. A movie company and a TV network both want exclusive rights to one of her more popular works. If she signs with the network, she will receive a single lump sum, but if she signs with the movie company, the amount she will receive depends on the market response to her movie. Table 3 presents the payoff matrix (in '000) for Jenny Lind. Table 3: Profit matrix States of Nature Small Box Medium Box Large Box Decisions Office Office Office Sign with Movie Company R200 R1000 3000 Sign with TV Network R900 R900 R900 Prior Probabilities 0.3 0.6 0.1 Applying the decision tree algorithm, determine and advice Koki Nkoana on the best decision to make?
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