Develop a decision tree. b) Which supplier should Kellogg use?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department. The quality of the test sets from her two suppliers is indicated in the following table:

For example, the probability of getting a batch of tests that are 1% defective from Winter Park Technology is .70. Because Kellogg orders 10,000 tests per order, this would mean that there is a .70 probability of getting 100 defective tests out of the 10,000 tests if Winter Park Technology is used to fill the order. A defective Breathalyzer test set can be repaired for $0.50. Although the quality of the test sets of the second supplier, Dayton Enterprises, is lower, it will sell an order of 10,000 test sets for $37 less than Winter Park.

a) Develop a decision tree.

b) Which supplier should Kellogg use?

PERCENT
DEFECTIVE
PROBABILITY FOR
WINTER PARK
TECHNOLOGY
PROBABILITY FOR
DAYTON
ENTERPRISES
1
.70
.30
3
.20
.30
5
.10
.40
Transcribed Image Text:PERCENT DEFECTIVE PROBABILITY FOR WINTER PARK TECHNOLOGY PROBABILITY FOR DAYTON ENTERPRISES 1 .70 .30 3 .20 .30 5 .10 .40
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