A Do-It-Yourself Homeowner Is Installing a New Toilet

question 38

Essay

A do-it-yourself homeowner is installing a new toilet. While installing the toilet he must decide on what kind of connecting pipe he will install to the water supply. There are two available options, one that has a shut-off valve in case of a leak and a cheaper one without the shut-off valve. Suppose that the shut-off valve pipe costs an extra ten dollars and that the homeowner must buy one of the two.
(a) Draw a decision tree for this scenario, labeling the cost of a leak as X and the chance of a leak as P.
(b) If the chance of a leak causing household damage is 1%, at what $ amount of household damage is the owner neutral on which pipe to buy?
(c) If the cost of a leak would be $10,000 what is the maximum % chance to leak at which the homeowner would prefer to buy the cheaper pipe?
(d) If the cost of a leak is $1,000 and the chance to flood .1% which pipe should the homeowner buy?

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Definitions:

Specialized Tasks

Tasks that require specific skills and knowledge, often contributing to the overall efficiency and effectiveness of operations.

Task Analysis

The process of breaking down a task into its component parts to understand the knowledge, skills, and processes required to complete it.

Arranging Work

The process of organizing tasks, responsibilities, and timelines to efficiently complete job duties or projects.

Job Design

The process of organizing tasks, responsibilities, and systems to ensure job satisfaction and to maximize employee efficiency and performance.