All Related Questions of Decision Tree

Q: Use the CCH IntelliConnect Browse function and select the Federal Tax Editorial

Use the CCH IntelliConnect Browse function and select the Federal Tax Editorial Content heading to answer the following questions: a. Using Quick Answers Tax Rates, Tables and Credits, determine the p...

Q: The Steiner-Wallace Corporation has determined that it needs to expand

The Steiner-Wallace Corporation has determined that it needs to expand in order to accommodate growing demand for its laptop computers. The decision has come down to either expanding now with a large...

Q: The owners of Sweet-Tooth Bakery have determined that they need

The owners of Sweet-Tooth Bakery have determined that they need to expand their facility in order to meet their increased demand for baked goods. The decision is whether to expand now with a large fac...

Q: Demand has grown at Dairy May Farms, and it is considering

Demand has grown at Dairy May Farms, and it is considering expanding. One option is to expand by purchasing a very large farm that will be able to meet expected future demand. Another option is to exp...

Q: Spectrum Hair Salon is considering expanding its business, as it is

Spectrum Hair Salon is considering expanding its business, as it is experiencing a large growth. The question is whether it should expand with a bigger facility than needed, hoping that demand will ca...

Q: Jody of Jody’s Custom Tailoring is considering expanding her growing business.

Jody of Jody’s Custom Tailoring is considering expanding her growing business. The question is whether to expand with a bigger facility than she needs or with a small facility, knowing that she will h...

Q: Will the use of decision tree analysis guarantee the best decision for

Will the use of decision tree analysis guarantee the best decision for a firm? Why or why not? If not, why bother using it?

Q: Consider the example in Exhibit 5.5. Can you think

Consider the example in Exhibit 5.5. Can you think of anything else you might do with that example that would be helpful to the ultimate decision maker?

Q: Expando, Inc. is considering the possibility of building an additional

Expando, Inc. is considering the possibility of building an additional factory that would produce a new addition to its product line. The company is currently considering two options. The first is a s...

Q: A builder has located a piece of property that she would like

A builder has located a piece of property that she would like to buy and eventually build on. The land is currently zoned for four homes per acre, but she is planning to request new zoning. What she b...

Q: Bradford is a small town that currently has no fast food restaurants

Bradford is a small town that currently has no fast food restaurants. McDonald’s and Burger King both are considering entering this market. Burger King will wait until McDonaldâ...

Q: Refer to Figure 14.5 on page 484. Consider the

Refer to Figure 14.5 on page 484. Consider the entries in the row of the payoff matrix that correspond to Saudi Arabia choosing “Low Output.” Suppose the numbers ch...

Q: The Yoran Yacht Company (YYC), a prominent sailboat builder

The Yoran Yacht Company (YYC), a prominent sailboat builder in Newport, may design a new 30-foot sailboat based on the “winged” keels first introduced on the 12-meter yachts that raced for the America...

Q: Hart Lumber is considering the purchase of a paper company, which

Hart Lumber is considering the purchase of a paper company, which would require an initial investment of $300 million. Hart estimates that the paper company would provide net cash flows of $40 million...

Q: Fethe’s Funny Hats is considering selling trademarked, orange-haired curly

Fethe’s Funny Hats is considering selling trademarked, orange-haired curly wigs for University of Tennessee football games. The purchase cost for a 2-year franchise to sell the wigs is $20,000. If dem...

Q: Rework Problem 14-5 using the Black-Scholes model to

Rework Problem 14-5 using the Black-Scholes model to estimate the value of the option. Assume that the variance of the project’s rate of return is 20.25% and that the risk-free rate is 6%. Data from...

Q: Jim Sellers is thinking about producing a new type of electric razor

Jim Sellers is thinking about producing a new type of electric razor for men. If the market were favorable, he would get a return of $100,000, but if the market for this new type of razor were unfavor...

Q: Coren Chemical, Inc., develops industrial chemicals that are used by

Coren Chemical, Inc., develops industrial chemicals that are used by other manufacturers to produce photographic chemicals, preservatives, and lubricants. One of their products, K-1000, is used by sev...

Q: The Toledo Leather Company has been producing leather goods for more than

The Toledo Leather Company has been producing leather goods for more than 30 years. It purchases prepared hides from tanners and produces leather clothing accessories such as wallets, belts, and handb...

Q: The physicians in Problem 3-36 have been approached by a

The physicians in Problem 3-36 have been approached by a market research firm that offers to perform a study of the market at a fee of $5,000. The market researchers claim their experience enables the...

Q: Jerry Smith (see Problem 3-38) has done some

Jerry Smith (see Problem 3-38) has done some analysis about the profitability of the bicycle shop. If Jerry builds the large bicycle shop, he will earn $60,000 if the market is favorable, but he will...

Q: A financial advisor has recommended two possible mutual funds for investment:

A financial advisor has recommended two possible mutual funds for investment: Fund A and Fund B. The return that will be achieved by each of these depends on whether the economy is good, fair, or poor...

Q: In Problem 3-37, you helped the medical professionals analyze

In Problem 3-37, you helped the medical professionals analyze their decision using expected monetary value as the decision criterion. This group has also assessed its utility for money: U(-$45,000) =...

Q: In this chapter, a decision tree was developed for John Thompson

In this chapter, a decision tree was developed for John Thompson (see Figure 3.5 for the complete decision tree analysis). After completing the analysis, John was not completely sure that he is indiff...

Q: Mary is considering opening a new grocery store in town. She

Mary is considering opening a new grocery store in town. She is evaluating three sites: downtown, the mall, and out at the busy traffic circle. Mary calculated the value of successful stores at these...

Q: A group of medical professionals is considering the construction of a private

A group of medical professionals is considering the construction of a private clinic. If the medical demand is high (i.e., there is a favorable market for the clinic), the physicians could realize a n...

Q: Jerry Smith is thinking about opening a bicycle shop in his hometown

Jerry Smith is thinking about opening a bicycle shop in his hometown. Jerry loves to take his own bike on 50-mile trips with his friends, but he believes that any small business should be started only...

Q: Keystone Manufacturing, Inc., is analyzing a new bid to supply

Keystone Manufacturing, Inc., is analyzing a new bid to supply the company with electronic control systems. Alpha Corporation has been supplying the systems and Keystone is satisfied with its performa...

Q: Surgery: A patient is very sick, and will die

Surgery: A patient is very sick, and will die in 6 months if he goes untreated. The only available treatment is risky surgery. The patient is expected to live for 12 months if the surgery is successfu...

Q: Drilling for Oil: An oil drilling company must decide whether

Drilling for Oil: An oil drilling company must decide whether or not to engage in a new drilling venture before regulators pass a law that bans drilling on that site. The cost of drilling is $1,000,0...

Q: Going to the Movies: There are two movie theatres in your

Going to the Movies: There are two movie theatres in your neighbor- hood: Cineclass, which is located one mile from your home, and Cineblast, located 3 miles from your home, each showing three films....

Q: Summarize the basic steps in the decision tree analysis methodology.

Summarize the basic steps in the decision tree analysis methodology.

Q: Discuss why using expected trends for the future can lead to different

Discuss why using expected trends for the future can lead to different supply chain decisions relative to decision tree analysis that accounts for uncertainty.

Q: Glenn Foreman, president of Oceanview Development Corporation based in Portugal,

Glenn Foreman, president of Oceanview Development Corporation based in Portugal, is considering submitting a bid to purchase property that will be sold by sealed bid. Glenn’s initial...

Q: For the pay-off table shown in Table 6.3

For the pay-off table shown in Table 6.3 construct a decision tree to confirm the decision without perfect information. If the pay-off for pilot/zero growth was now changed to -£10 (000),...

Q: A manufacturing firm has decided to capitalize on its existing success by

A manufacturing firm has decided to capitalize on its existing success by building an extension to its production plant to come on stream by 2018. The firm has evaluated the decision and calculated th...

Q: A large multinational oil company is considering its strategy in the North

A large multinational oil company is considering its strategy in the North Sea. The UK government has announced that a new drilling site in the North Sea will be offered for sale on a competitive tend...

Q: A small engineering firm is under increasing pressure from foreign competitors and

A small engineering firm is under increasing pressure from foreign competitors and is considering a number of strategic options. One of these relates to changing over from the existing production proc...

Q: A small company finds itself in the position of having to complete

A small company finds itself in the position of having to complete a contract for a large customer or pay high financial penalties for failing to deliver. The firm finds itself with a problem. The sto...

Q: The Filzen Company sells construction supplies to building contractors, mostly on

The Filzen Company sells construction supplies to building contractors, mostly on a wholesale basis. The company has been in business for over 30 years. The current owner is Joshua Filzen, although th...

Q: The approval rules for reimbursing those faculty members at Upstate University who

The approval rules for reimbursing those faculty members at Upstate University who attend professional conferences are somewhat complicated and, in the opinion of most, “hardly generous.” For example,...

Q: Consider the two capacity options for Arktec Manufacturing shown below:

Consider the two capacity options for Arktec Manufacturing shown below:Demand (Units Per Year)……………&...

Q: Emily Watkins, a recent college graduate, faces some tough choices.

Emily Watkins, a recent college graduate, faces some tough choices. Emily must decide whether to accept an offer for a job that pays $35,000 or hold out for another job that pays $45,000 a year. Emily...

Q: Merck is considering launching a new drug called Laffolin. Merck

Merck is considering launching a new drug called Laffolin. Merck has identified two possible demand scenarios:Demand Level………â€&b...

Q: Rich Sawyer runs a landscaping firm. Each year Rich contracts

Rich Sawyer runs a landscaping firm. Each year Rich contracts for labor and equipment hours from a local construction company. The construction company has given Rich three different capacity options:...

Q: For the DoorCo Corporation decision in Problems 2 and 9,

For the DoorCo Corporation decision in Problems 2 and 9, construct a decision tree and compute the rollback values to find the best expected value decision.In Problems 9For the DoorCo Corporation deci...

Q: For the car-rental decision in Problems 3 and 10, construct

For the car-rental decision in Problems 3 and 10, construct a decision tree and compute the rollback values to find the best expected value decision.In Problems 10For the car-rental situation describe...

Q: A patient arrives at an emergency room complaining of abdominal

A patient arrives at an emergency room complaining of abdominal pain. The ER physician must decide on whether to operate or to place the patient under observation for a non-appendix-related condition....

Q: Midwestern Hardware must decide how many snow shovels to order

Midwestern Hardware must decide how many snow shovels to order for the coming snow season. Each shovel costs $15.00 and is sold for $29.95. No inventory is carried from one snow season to the next. Sh...

Q: Perform a sensitivity analysis of the Midwestern Hardware scenario (Problem

Perform a sensitivity analysis of the Midwestern Hardware scenario (Problem 18). Find the optimal order quantity and optimal expected profit for probabilities of a harsh winter ranging from 0.2 to 0.8...

Q: Dean Kuroff started a business of rehabbing old homes. He

Dean Kuroff started a business of rehabbing old homes. He recently purchased a circa-1800 Victorian mansion and converted it into a three-family residence. Recently, one of his tenants complained that...

Q: MJ Logistics has decided to build a new warehouse to

MJ Logistics has decided to build a new warehouse to support its supply chain activities. They have the option of building either a large warehouse or a small one. Construction costs for the large fac...

Q: How realistic do you think it is for managers to attempt to

How realistic do you think it is for managers to attempt to use Vroom’s decision tree approach as prescribed? Explain.

Q: Of the three major leadership theories – the LPC theory, the

Of the three major leadership theories – the LPC theory, the path-goal theory, and Vroom’s decision tree approach – which is the most comprehensive? Which is the narrowest? Which has the most practi...

Q: Allison’s Dresswear Manufacturers is preparing a strategy for the fall season.

Allison’s Dresswear Manufacturers is preparing a strategy for the fall season. One alternative is to expand its traditional ensemble of wool sweaters. A second option would be to ent...

Q: The CFO of CanGold Company is considering investing in a gold mine

The CFO of CanGold Company is considering investing in a gold mine in Mongolia. The mine will cost $200 million to get into production and will last for one year. At the end of one year, it is expecte...

Q: Expedic Utility Corp. needs to increase its electricity production capacity.

Expedic Utility Corp. needs to increase its electricity production capacity. It is interested in a slightly used reactor located in Ontario. It has been offered two alternatives: buy the reactor for $...

Q: Your company is planning on opening an office in Japan. Profits

Your company is planning on opening an office in Japan. Profits depend on how fast the economy in Japan recovers from its current recession. There is a 50% chance of recovery this year. You are trying...

Q: What decision should you make in Problem 2 if the one-

What decision should you make in Problem 2 if the one-year cost of capital is 15.44% and the profits last forever? Data from Problem 2: You are trying to decide whether to make an investment of $500...

Q: You are trying to decide whether to make an investment of $

You are trying to decide whether to make an investment of $500 million in a new technology to produce Everlasting Gobstoppers. There is a 60% chance that the market for these candies will produce prof...

Q: Using the information in Problem 2, rework the problem assuming you

Using the information in Problem 2, rework the problem assuming you find out the size of the Everlasting Gobstopper market one year after you make the investment. That is, if you do not make the inves...

Q: How would the transaction in BE23-13 be recorded if the

How would the transaction in BE23-13 be recorded if the individual shareholder owned only 40% of the shares of each company? Assume that there is independent evidence to support the value of the robot...

Q: Nguyen Limited buys land from its president for $390,000

Nguyen Limited buys land from its president for $390,000 in cash, which is the land’s appraised value at the time of the purchase. The land was purchased by the president 15 years ago for $65,000. (a)...

Q: Textile manufacturer Fiber right Corp. exchanges robotic equipment with an original

Textile manufacturer Fiber right Corp. exchanges robotic equipment with an original cost of $20,000 and a carrying amount of $11,000 with the equipment rental company Frederick Corp. The equipment tha...

Q: How would the transaction in BE23-13 be recorded if it

How would the transaction in BE23-13 be recorded if it were arm’s length? Data from BE23-13: Textile manufacturer Fiber right Corp. exchanges robotic equipment with an original cos...

Q: Maffin Corp. owns 75% of Grey Inc. Both companies

Maffin Corp. owns 75% of Grey Inc. Both companies are in the mining industry. During 2017, Maffin Corp. purchased a building from Grey Inc. for $1,000. The building’s original cost i...

Q: Verez Limited owns 90% of Consior Inc. During 2017,

Verez Limited owns 90% of Consior Inc. During 2017, Verez acquired a machine from Consior in exchange for its own used machine. Both companies are in the tool-making business. The agreed exchange amou...

Q: Draw the decision tree for Exercise 22.1.

Draw the decision tree for Exercise 22.1.

Q: As CEO of firm A, you and your management team face

As CEO of firm A, you and your management team face the decision of whether to undertake a $200 million R&D effort to create a new mega-medicine. Your research scientists estimate that there is a (,0...

Q: Northwest Entertainment Inc. operates a multiplex cinema that has nine small

Northwest Entertainment Inc. operates a multiplex cinema that has nine small theaters in one building. Business has been good lately and management is considering a project that will add five screens...

Q: Work Station Inc. manufactures office furniture. The firm is interested

Work Station Inc. manufactures office furniture. The firm is interested in “ergonomic” products that are designed to be easier on the bodies of office workers&acir...

Q: Vaughn Clothing is considering refurbishing its store at a cost of $

Vaughn Clothing is considering refurbishing its store at a cost of $1.4 million. Management is concerned about the economy and whether a competitor, Viola Apparel, will open a store in the neighborhoo...

Q: Spitfire Aviation Inc. manufactures small, private aircraft. Management is

Spitfire Aviation Inc. manufactures small, private aircraft. Management is evaluating a proposal to introduce a new high-performance plane. High performance aviation is an expensive sport undertaken l...

Q: The New England Brewing Company produces a super-premium beer using

The New England Brewing Company produces a super-premium beer using a recipe that’s been in the owner’s family since colonial times. Surprisingly, the firm doesn’t own its own brewing facilities, but...

Q: Maffin Corp. owns 75% of Grey Inc. Both companies

Maffin Corp. owns 75% of Grey Inc. Both companies are in the mining industry. During 2020, Maffin Corp. purchased a building from Grey Inc. for $1,000. The building's original cost is $25,000 and its...

Q: Verez Limited owns 90% of Consior Inc. During 2020,

Verez Limited owns 90% of Consior Inc. During 2020, Verez acquired a machine from Consior in exchange for its own used machine. Both companies are in the tool-making business. The agreed exchange amou...

Q: For the probabilities of Exercise 8 and the decision tree of Exercise

For the probabilities of Exercise 8 and the decision tree of Exercise 4, using the expected values found in Exercise 8, compute the standard deviations of the values associated with each action and th...

Q: Here is a decision tree for the profits (in $000’s

Here is a decision tree for the profits (in $000’s) you project for your sales of the cell phone screen defroster, depending on the weather this coming winter and your choice of adve...

Q: For the decision tree of Exercise 4, a) What

For the decision tree of Exercise 4, a) What is the maximin choice? b) What is the maximax choice? Exercise 4: Here is a decision tree for the profits (in $000’s) you project for yo...

Q: For the decision tree of Exercise 4, a) Suppose

For the decision tree of Exercise 4, a) Suppose P(Warm) = 0.5, P(Moderate) = 0.3, and P(Cold) = 0.2. What is the expected value of each action? b) What is the best choice using the expected-value appr...

Q: After a series of extensive meetings, several of the key decision

After a series of extensive meetings, several of the key decision-makers for a small marketing firm have produced the following payoff table (expected profit per customer) for various advertising stra...

Q: An investment bank is thinking of investing in a start-up

An investment bank is thinking of investing in a start-up alternative energy company. They can become a major investor for $6M, a moderate investor for $3M, or a small investor for $1.5M. The worth of...

Q: Construct a decision tree for the payoff table in Exercise 11.

Construct a decision tree for the payoff table in Exercise 11.

Q: Construct a decision tree for the payoff table in Exercise 12.

Construct a decision tree for the payoff table in Exercise 12.

Q: The company in Exercises 14, 22, and 24 could send

The company in Exercises 14, 22, and 24 could send a team to Saudi Arabia to obtain additional information about the probabilities that oil will increase or decrease in price. They hope that the fact-...

Q: John Campbell, an employee of Manhattan Construction Company, claims to

John Campbell, an employee of Manhattan Construction Company, claims to have injured his back as a result of a fall while repairing the roof at one of the Eastview apartment buildings. In a lawsuit as...

Q: Glenn Foreman, president of Oceanview Development Corporation, is considering submitting

Glenn Foreman, president of Oceanview Development Corporation, is considering submitting a bid to purchase property that will be sold by sealed-bid auction at a county tax foreclosure. Glennâ
...

Q: The following payoff table shows profit for a decision analysis problem with

The following payoff table shows profit for a decision analysis problem with two decision alternatives and three states of nature. a. Construct a decision tree for this problem. b. Suppose that the...

Q: Dante Development Corporation is considering bidding on a contract for a new

Dante Development Corporation is considering bidding on a contract for a new office building complex. Figure 19.9 shows the decision tree prepared by one of Dante’s analysts. At node...

Q: More than 500 scripted television series were available for viewing in 2018

More than 500 scripted television series were available for viewing in 2018 (Hollywood Reporter website). New series typically start by producing a pilot episode that can be evaluated by a network bef...

Q: Martin’s Service Station is considering entering the snowplowing business for the coming

Martin’s Service Station is considering entering the snowplowing business for the coming winter season. Martin can purchase either a snowplow blade attachment for the stationâ&...

Q: To save on expenses, Rona and Jerry agreed to form a

To save on expenses, Rona and Jerry agreed to form a carpool for traveling to and from work. Rona preferred to use the somewhat longer but more consistent Queen City Avenue. Although Jerry preferred t...

Q: The Gorman Manufacturing Company must decide whether to manufacture a component part

The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent upo...

Q: The computer-gaming market in the United States is estimated

The computer-gaming market in the United States is estimated at $18.5 billion as of 2017 (VentureBeat web site). Consider the case of Video Tech, a computer-gaming company located in San Jose, Califor...

Q: Consider a variation of the PDC decision tree shown in Figure 19

Consider a variation of the PDC decision tree shown in Figure 19.5. The company must first decide whether to undertake the market research study. If the market research study is conducted, the outcome...

Q: In 2017, the American Red Cross had to make decisions related

In 2017, the American Red Cross had to make decisions related to preparations for Hurricane Irma, which was threatening the United States, including the state of Florida, Puerto Rico, and the U.S. Vir...

Q: Hemmingway, Inc. is considering a $50 million research and

Hemmingway, Inc. is considering a $50 million research and development (R&D) project. Profit projections appear promising, but Hemmingway’s president is concerned because the pro...

Q: Embassy Publishing Company received a sixchapter manuscript for a new college textbook

Embassy Publishing Company received a sixchapter manuscript for a new college textbook. The editor of the college division is familiar with the manuscript and estimated a .65 probability that the text...

Q: Shown here is a decision table from a business situation. The

Shown here is a decision table from a business situation. The decision maker has an opportunity to purchase sample information in the form of a forecast. With the sample information, the prior probabi...

Q: Use the following decision table to complete parts a through c.

Use the following decision table to complete parts a through c. a) Draw a decision tree to represent this decision table. b) Compute the expected monetary values for each decision and label the decis...

Q: Shown here is a decision table. A forecast can be purchased

Shown here is a decision table. A forecast can be purchased by the decision maker. The forecaster is not correct 100% of the time. Also given is a table containing the probabilities of the forecast be...

Q: A U.S. manufacturing company decided to consider producing a

A U.S. manufacturing company decided to consider producing a particular model of one of its products just for sale in Germany. Because of the German requirements, the product must be made specifically...

Q: Use the following decision table to complete parts a through c.

Use the following decision table to complete parts a through c. a) Draw a decision tree to represent this payoff table. b) Compute the expected monetary values for each decision and label the decisio...

Q: The Fletcher-Terry Company of Farmington, Connecticut, is a

The Fletcher-Terry Company of Farmington, Connecticut, is a worldwide leader in the development of glass-cutting tools and accessories for professional glaziers, glass manufacturers, glass artisans, a...

Q: A large decision tree has an outcome branch detailed below. If

A large decision tree has an outcome branch detailed below. If decisions D1, D2, and D3 are all options in a 1-year time period, find the decision path that maximizes the outcome value. There are spec...

Q: Five thousand new smart camera systems are needed annually to expand the

Five thousand new smart camera systems are needed annually to expand the security surveillance of roads, buildings, airports, parks, etc. in a large metropolitan area. The system components can be obt...

Q: The president of ChemTech is trying to decide whether to start a

The president of ChemTech is trying to decide whether to start a new product line or purchase a small company. It is not financially possible to do both. To make the product for a 3-year period will r...

Q: A decision tree includes all of the following except: (

A decision tree includes all of the following except: (a) Probability estimates for each outcome (b) Measure of worth as the selection criterion (c) Expected results from a decision at each stage (d)...

Q: For the decision tree branch shown, determine the expected values of

For the decision tree branch shown, determine the expected values of the two outcomes if decision D3 is already selected and the maximum outcome value is sought. (This decision branch is part of a lar...

Q: Describe a case where a decision tree will not be the optimal

Describe a case where a decision tree will not be the optimal model for decisions.

Q: Why is a decision tree appropriate for making decisions under risk?

Why is a decision tree appropriate for making decisions under risk?

Q: Describe how and when making a decision tree will make you do

Describe how and when making a decision tree will make you do the right decisions.

Q: Al-Andalus retail store in Saudi Arabia wants to decide on

Al-Andalus retail store in Saudi Arabia wants to decide on whether to build a large or a small store in the city of Dammam. The expected net present value of the return per month of the decision will...

Q: Ahmed Saif is the manager of a large agriculture firm that owns

Ahmed Saif is the manager of a large agriculture firm that owns 100,000 acres in the new valley project of Toshka in the Western desert of Egypt. He now needs to decide on which one of three crops to...

Q: Abdulla wants to decide on the best route to take for work

Abdulla wants to decide on the best route to take for work from two possible routes: A and B. The time taken to work on each route depends on the traffic. If Abdulla takes route A, it will take him 25...

Q: A large investment firm wants to decide on how to invest one

A large investment firm wants to decide on how to invest one million dollars. The board is considering three options: invest in stocks, invest in T-Bills, or do nothing. There are two possibilities fo...

Q: In the TV show and game “Who Wants to be a

In the TV show and game “Who Wants to be a Millionaire?” the participants get four choices for each question and the questions get tougher and tougher the longer a...

Q: Bakery Products is considering the introduction of a new line of pastries

Bakery Products is considering the introduction of a new line of pastries. In order to produce the new line, the bakery is considering either a major or a minor renovation of its current plant. Bill W...

Q: Leah Johnson, director of Urgent Care of Brookline, wants to

Leah Johnson, director of Urgent Care of Brookline, wants to increase capacity to provide low-cost flu shots but must decide whether to do so by hiring another full-time nurse or by using part-time nu...

Q: A company has developed a promising new product and examines the following

A company has developed a promising new product and examines the following three alternatives of manufacturing. Alternative 1 is to buy a semiautomatic machine with an initial cost of €130,000. Altern...

Q: Decision trees* Your midrange guess as to the amount of oil

Decision trees* Your midrange guess as to the amount of oil in a prospective field is 10 million barrels, but there is a 50% chance that the amount of oil is 15 million barrels and a 50% chance of 5 m...

Q: Decision trees Look again at the decision tree in Figure 10.

Decision trees Look again at the decision tree in Figure 10.4. Expand the possible outcomes as follows: 1. Blockbuster: PV = $1.5 billion with 5% probability. 2. Above average: PV = $700 million with...

Q: Decision trees Magna Charter is a new corporation formed by Agnes Magna

Decision trees Magna Charter is a new corporation formed by Agnes Magna to provide an executive flying service for the southeastern United States. The founder thinks there will be a ready demand from...

Q: Refer to Exhibit 16A.1, which presents a decision tree

Refer to Exhibit 16A.1, which presents a decision tree for impairments of investments in financial assets under U.S. GAAP. Detail the decisions and judgments that you must make when determining whethe...

Q: Refer to Exhibit 16A.2, which presents a decision tree

Refer to Exhibit 16A.2, which presents a decision tree for impairments of investments in financial assets under IFRS. Please detail the decisions and judgments that you must make when determining whet...

Q: For the DoorCo Corporation decision, construct a decision tree and compute

For the DoorCo Corporation decision, construct a decision tree and compute the rollback values to find the best expected value decision.

Q: For Peter Cartman’s investment decision, construct a decision tree and compute

For Peter Cartman’s investment decision, construct a decision tree and compute the rollback values to find the best expected value decision.

Q: David Lee is a soft drinks stallholder at Cotton Tree Park.

David Lee is a soft drinks stallholder at Cotton Tree Park. He must decide how many soft drink cartons to order for the coming season. Each bottle of soft drink costs $2.50 and is sold for $4.80. No i...

Q: Dean Kuroff started a business of rehabbing old homes. He recently

Dean Kuroff started a business of rehabbing old homes. He recently purchased a circa-1800 Victorian mansion and converted it into a three-family residence. Yesterday, one of his tenants complained tha...

Q: Ravex Yacht has developed a new cabin cruiser, which they have

Ravex Yacht has developed a new cabin cruiser, which they have earmarked for the medium to large boat market. A market analysis suggests a 30% probability of annual sales being 5,000 boats, 40% probab...

Q: Drilling decisions by oil and gas operators involve intensive capital expenditures made

Drilling decisions by oil and gas operators involve intensive capital expenditures made in an environment characterized by limited information and high risk. A well site is dry, wet, or gushing. Histo...

Q: A college football team is trailing 14–0 late in the

A college football team is trailing 14–0 late in the game. The team just made a touchdown. If they can hold the opponent and score one more time, they can tie or win the game. The coach is wondering w...

Q: Steeley Associates, Inc., a property development firm, purchased an

Steeley Associates, Inc., a property development firm, purchased an old house near the town square in Concord Falls, where State University is located. The old house was built in the mid-1800s, and St...

Q: Mountain States Electric Service is an electrical utility company serving several states

Mountain States Electric Service is an electrical utility company serving several states in the Rocky Mountains region. It is considering replacing some of its equipment at a generating substation and...

Q: WestCom Systems Products Company develops computer systems and software products for commercial

WestCom Systems Products Company develops computer systems and software products for commercial sale. Each year it considers and evaluates a number of different R&D projects to undertake. It...

Q: Construct a decision tree for the decision situation of Volkswagen in Problem

Construct a decision tree for the decision situation of Volkswagen in Problem 43 and indicate the best decision.

Q: The management of First American Bank was concerned about the potential loss

The management of First American Bank was concerned about the potential loss that might occur in the event of a physical catastrophe such as a power failure or a fire. The bank estimated that the loss...

Q: The Americo Oil Company is considering making a bid for a shale

The Americo Oil Company is considering making a bid for a shale oil development contract to be awarded by the federal government. The company has decided to bid $112 million. The company estimates tha...

Q: The machine shop owner in Problem 17 is considering hiring a military

The machine shop owner in Problem 17 is considering hiring a military consultant to ascertain whether the shop will get the government contract. The consultant is a former military officer who uses va...

Q: The Miramar Company in Problem 20 is considering contracting with a market

The Miramar Company in Problem 20 is considering contracting with a market research firm to do a survey to determine future market conditions. The results of the survey will indicate either positive o...

Q: Tech is playing State in the last conference game of the season

Tech is playing State in the last conference game of the season. Tech is trailing State 21 to 14, with 7 seconds left in the game, when Tech scores a touchdown. Still trailing 21 to 20, Tech can eithe...

Q: Jay Seago is suing the manufacturer of his car for $3

Jay Seago is suing the manufacturer of his car for $3.5 million because of a defect that he believes caused him to have an accident. The accident kept him out of work for a year. The company has offer...

Q: A car manufacturer buys fasteners such as bolts and nuts for its

A car manufacturer buys fasteners such as bolts and nuts for its cars. On an average, the company buys 1 million such pairs per month. The company inspects the arriving lots and transfers the lots to...

Q: Kroft Food Products is attempting to decide whether it should introduce a

Kroft Food Products is attempting to decide whether it should introduce a new line of salad dressings called Special Choices. The company can test market the salad dressings in selected geographic are...

Q: Ellie Daniels has $200,000 and is considering three mutual

Ellie Daniels has $200,000 and is considering three mutual funds for investment—a global fund, an index fund, and an Internet stock fund. During the first year of investment, Ellie e...

Q: In Problem 14, the management of the Oakland Bombers is considering

In Problem 14, the management of the Oakland Bombers is considering hiring superscout Jerry McGuire to evaluate the team’s chances for the coming season. McGuire will evaluate the team, assuming that...

Q: Labran Jones has played for the Cleveland professional basketball team for the

Labran Jones has played for the Cleveland professional basketball team for the past eight seasons and has established himself as one of the top players in the league. He has recently become a free age...

Q: Refer to the previous question. Morley Properties can hire a consultant

Refer to the previous question. Morley Properties can hire a consultant to predict the most likely level of demand for this project. This consultant has done many similar studies and has provided Morl...

Q: Refer to question 10. Suppose that the consultant’s fee is $

Refer to question 10. Suppose that the consultant’s fee is $5,000 and the utility function for the owner of Morley Properties can be approximated by the exponential utility function...

Q: The Tall Oaks Wood Products Company is considering purchasing timberland for $

The Tall Oaks Wood Products Company is considering purchasing timberland for $5 million that would provide a future source of timber supply for the company’s operations over the next 10 years. Alterna...

Q: Microproducts, Incorporated (MPI) manufactures printed circuit boards for a

Microproducts, Incorporated (MPI) manufactures printed circuit boards for a major PC manufacturer. Before a board is sent to the customer, three key components must be tested. These components can be...

Q: Refer to the previous question. A manufacturing engineer for MPI collected

Refer to the previous question. A manufacturing engineer for MPI collected the following data on the failure rates of components X, Y, and Z in a random sample of 1,000 circuit boards: For example, t...

Q: Southern Gas Company (SGC) is preparing to make a bid

Southern Gas Company (SGC) is preparing to make a bid for oil and gas leasing right in a newly opened drilling area in the Gulf of Mexico. SGC is trying to decide whether to placea high bid of $16 mil...

Q: Bulloch County has never allowed liquor to be sold in restaurants.

Bulloch County has never allowed liquor to be sold in restaurants. However, in 3 months, county residents are scheduled to vote on a referendum to allow liquor to be sold by the drink. Currently, poll...

Q: The Banis co Corporation is negotiating a contract to borrow $300

The Banis co Corporation is negotiating a contract to borrow $300,000 to be repaid in a lump sum at the end of 9 years. Interest payments will be made on the loan at the end of each year. The company...

Q: Refer to the previous question. The present value (PV)

Refer to the previous question. The present value (PV) of a future cash-flow value (FV) is defined as: where n is the number of years into the future in which the cash flow occurs and r is the discou...

Q: The Mobile Oil company has recently acquired oil rights to a new

The Mobile Oil company has recently acquired oil rights to a new potential source of natural oil in Alaska. The current market value of these rights is $90,000. If there is natural oil at the site, it...

Q: Thom DeBusk, an architect, is considering buying, restoring,

Thom DeBusk, an architect, is considering buying, restoring, and reselling a home in the Draper-Preston historic district of Blacksburg, VA. The cost of the home is $240,000 and Thom believes it can b...

Q: Anyone who has suffered with an acute or chronic illness is probably

Anyone who has suffered with an acute or chronic illness is probably very appreciative for whatever drugs are available to cure or manage the disease. In the United States, the Food and Drug Administr...

Q: In a summer plagued by drought and heat, many Southern crops

In a summer plagued by drought and heat, many Southern crops are withering in the fields, taking farmers’ profits down with them. Some farmers are fighting to break even. But others have had to give u...

Q: In the mid-1990s, DHL was the world’s largest shipping

In the mid-1990s, DHL was the world’s largest shipping company, with $5.7 billion in revenue and 60,000 employees. Larry Hillbloom was the “H” in DHL and founder of the company. DHL started on a shoes...

Q: Sam Ellis is worried. As president and CEO of Forward Software

Sam Ellis is worried. As president and CEO of Forward Software, Sam introduced a new spreadsheet product, Cinco, to the market last year. Forward Software has been developing and marketing high-qualit...

Q: SportTee makes T-shirts for national sporting goods and retail chain

SportTee makes T-shirts for national sporting goods and retail chain stores. Sport Tee’s quality manager analyzed a random sample of 100 dissatisfied customers and found that 24 percent of them compla...

Q: In 2005, Tony Menendez, a former Ernst & Young LLP

In 2005, Tony Menendez, a former Ernst & Young LLP auditor and Director of Technical Accounting and Research Training for Halliburton, blew the whistle on Halliburton’s accounting practices. The fight...

Q: Use PrecisionTree to solve problem 7 of the previous section.

Use PrecisionTree to solve problem 7 of the previous section. Data from Problem 7: Sometimes a “single-stage” decision can be broken down into a sequence of decisions, with no uncertainty resolved be...

Q: If you examine the decision tree (or any other decision trees

If you examine the decision tree (or any other decision trees from PrecisionTree), you will see two numbers (in blue font) to the right of each end node. The bottom number is the combined monetary val...

Q: A technological failure implies that the game is over—the product

A technological failure implies that the game is over—the product must be abandoned. Change the problem so that there are two levels of technological failure, each with probability 0.1. In the first l...

Q: The model has only two market outcomes, good and bad,

The model has only two market outcomes, good and bad, and two corresponding predictions, good and bad. Modify the decision tree by allowing three outcomes and three predictions: good, fair, and bad. Y...

Q: A buyer for a large department store chain must place orders with

A buyer for a large department store chain must place orders with an athletic shoe manufacturer six months prior to the time the shoes will be sold in the department stores. The buyer must decide on N...

Q: Two construction companies are bidding against one another for the right to

Two construction companies are bidding against one another for the right to construct a new community center building in Bloomington, Indiana. The first construction company, Fine Line Homes, believes...

Q: A customer has approached a bank for a $100,000

A customer has approached a bank for a $100,000 one-year loan at an 8% interest rate. If the bank does not approve this loan application, the $100,000 will be invested in bonds that earn a 6% annual r...

Q: The senior executives of an oil company are trying to decide whether

The senior executives of an oil company are trying to decide whether to drill for oil in a particular field in the Gulf of Mexico. It costs the company $1,500,000 to drill in the selected field. Compa...

Q: Referring to the bank’s customer loan decision problem in Problem 41,

Referring to the bank’s customer loan decision problem in Problem 41, suppose now that the bank’s utility function of profit x (in dollars) is U(x) = 1 - e-x/150000. Find the strategy that maximizes t...

Q: Suppose an investor has the opportunity to buy the following contract,

Suppose an investor has the opportunity to buy the following contract, a stock call option, on March 1. The contract allows him to buy 100 shares of ABC stock at the end of March, April, or May at a g...

Q: The ending of the game between the Indianapolis Colts and the New

The ending of the game between the Indianapolis Colts and the New England Patriots (NFL teams) in Fall 2009 was quite controversial. With about two minutes left in the game, the Patriots were ahead 34...

Q: Sometimes a “single-stage” decision can be broken down

Sometimes a “single-stage” decision can be broken down into a sequence of decisions, with no uncertainty resolved between these decisions. Similarly, uncertainty can sometimes be broken down into a se...

Q: Continuing the previous problem, the file P14_12.xlsx

Continuing the previous problem, the file P14_12.xlsx contains the same wine data. Using a Microsoft Data Mining add-in (not discussed here), a decision tree classification was performed (with 0% of t...

Q: Which of the following is not a primary component of business applications

Which of the following is not a primary component of business applications of data science? a. Computer science and data skills b. Substantive expertise in natural sciences c. Math and statistics d. S...

Q: Kevin Brown is the management accountant at Boehm and Sons Bank.

Kevin Brown is the management accountant at Boehm and Sons Bank. Some of his colleagues attended a conference recently where they learned that machine learning can be used to accurately predict loan p...

Q: Laurie Rech is a management accountant at Donnelly Bank, which has

Laurie Rech is a management accountant at Donnelly Bank, which has recently suffered significant loan losses. Rech and her team are worried that they do not fully understand the risk profile of their...

Q: The data science team at Swift Investments uses a sample of 16

The data science team at Swift Investments uses a sample of 16 loans to build a decision tree that predicts whether a loan will repay or default. Although the data science team is very familiar with d...

Q: Assume the same information for TelMark as in Exercise 11-24

Assume the same information for TelMark as in Exercise 11-24. A member of the data science team points out that overfitting is often an issue with decision trees. To avoid this issue, he suggests prun...

Q: Assume the same information for Keebler- Olson as in Problems 11

Assume the same information for Keebler- Olson as in Problems 11-31 and 11-32. Required 1. Prune the tree at depth 3. Using the pruned tree, classify each loan in the validation sample as repay or de...

Q: It is June, and the manager of the retail chain Stapleton

It is June, and the manager of the retail chain Stapleton wants to increase revenues during the back-to-school period. To do that, he plans to attract more customers in August whose children are enter...

Q: Describe the decision tree technique of predictive modeling.

Describe the decision tree technique of predictive modeling.

Q: A company has developed a promising new product and examines the following

A company has developed a promising new product and examines the following three alternatives of manufacturing. Alternative 1 is to buy a semiautomatic machine with an initial cost of €130,000. Altern...