The director of career advising at Orange Community College wants to use decision analysis to provide information to help students decide which 2year degree program they should pursue. The director has set up the following payoff table for six of the most popular and successful degree programs at OCC that shows the estimated 5year gross income ($) from each degree for four future economic conditions:
Degree Program 
Economic Conditions 

Recession 
Average 
Good 
Robust 

Graphic Design 
145,000 
175,000 
220,000 
260,000 
Nursing 
150,000 
180,000 
205,000 
215,000 
Real Estate 
115,000 
165,000 
220,000 
320,000 
Medical Tech 
130,000 
180,000 
210,000 
280,000 
Culinary Tech 
115,000 
145,000 
235,000 
305,000 
Computer IT 
125,000 
150,000 
190,000 
250,000 
Probability 
0.2 
0.4 
0.3 
0.1 
Determine the best degree program in terms of projected income, using the following decision criteria:
a. Maximax
b. Maximin
c. Equal likelihood
d. Hurwicz (alpha = .6)
e. Minimax regret
f. EOL (expected opportunity loss)
g. The director of career advising at Orange Community College has paid a small fee to a local investment firm to indicate a probability for each future economic condition over the next 5 years, which is shown in the last row of the above table. Using expected value determine the best degree program in terms of projected income.
h. Determine the EVPI of this problem.
Fenton and Farrah Friendly, husbandandwife car dealers, are soon going to open a new dealership. They have three offers: from a foreign compact car company, from a U.S.producer of fullsized cars, and from a truck company. The success of each type of dealership will depend on how much gasoline is going to be available during the next few years. The profit from each type of dealership, given the availability of gas, is shown in the following payoff table:
Dealership 
Gasoline Availability 

Shortage (0.6) 
Surplus (0.4) 

Compact cars 
$300,000 
$150,000 
Fullsized cars 
100,000 
600,000 
Trucks 
120,000 
170,000 
The Friendlys are considering hiring a petroleum analyst to determine the future availability of gasoline. The analyst will report that either a shortage or a surplus will occur. The probability that the analyst will indicate a shortage, given that a shortage actually occurs is .90; the probability that the analyst will indicate a surplus, given that a surplus actually occurs is .70.
a. Construct a decision tree to determine the optimal strategy for Friendlys using TreePlan in Excel.
b. Determine the maximum amount the Friendlys should pay for the analyst’s services. (EVSI)
c. Compute the efficiency of the sample information for the Friendly car dealership.
Subject  Mathematics 
Due By (Pacific Time)  05/29/2013 06:00 pm 
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