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Consider the decision tree below. You are at the starting decision node DO (shown in the orange color). Assume all paths and decisions occur within a 1-year time horizon, so that no discounting is necessary. There are dollar investments, as shown, required at decision nodes D1 and D2. Which of the letters (shown in the red color) represents the optimal path maximizing the expected outcome value? Value, $ A 30 0.9 D3 Investment 0.4 100 $-50 0.1 0.6 -50 DI S-80 500 90 0.1 D1 500 $-80 90 Value $ 0.3 150 S-25 0.3 -30 0.4 75 0.5 200 D2 S-30- E 0.5 -100 $-35 50 O a. A O b. B O c. C O d. D O e. E O f. F

Consider the decision tree below. You are at the starting decision node DO (shown in the orange color). Assume all paths and decisions occur within a 1-year time horizon, so that no discounting is necessary. There are dollar investments, as shown, required at decision nodes D1 and D2. Which of the letters (shown in the red color) represents the optimal path maximizing the expected outcome value? Value, $ A 30 0.9 D3 Investment 0.4 100 $-50 0.1 0.6 -50 DI S-80 500 90 0.1 D1 500 $-80 90 Value $ 0.3 150 S-25 0.3 -30 0.4 75 0.5 200 D2 S-30- E 0.5 -100 $-35 50 O a. A O b. B O c. C O d. D O e. E O f. F

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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Consider the decision tree below. You are at the starting decision node DO (shown in the orange color). Assume all paths and decisions occur within a 1-year time horizon, so that no discounting is necessary. There are dollar investments, as shown, required at decision nodes D1 and D2. Which of the letters (shown in the red color) represents the optimal path maximizing the expected outcome value? Value, $ A 30 0.9 D3 Investment 0.4 100 $-50 0.1 0.6 -50 DI S-80 500 90
Transcribed Image Text:Consider the decision tree below. You are at the starting decision node DO (shown in the orange color). Assume all paths and decisions occur within a 1-year time horizon, so that no discounting is necessary. There are dollar investments, as shown, required at decision nodes D1 and D2. Which of the letters (shown in the red color) represents the optimal path maximizing the expected outcome value? Value, $ A 30 0.9 D3 Investment 0.4 100 $-50 0.1 0.6 -50 DI S-80 500 90
0.1 D1 500 $-80 90 Value $ 0.3 150 S-25 0.3 -30 0.4 75 0.5 200 D2 S-30- E 0.5 -100 $-35 50 O a. A O b. B O c. C O d. D O e. E O f. F
Transcribed Image Text:0.1 D1 500 $-80 90 Value $ 0.3 150 S-25 0.3 -30 0.4 75 0.5 200 D2 S-30- E 0.5 -100 $-35 50 O a. A O b. B O c. C O d. D O e. E O f. F
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