A Manager Is Quite Concerned About the Recent Deterioration of a Section

question 20

Short Answer

A manager is quite concerned about the recent deterioration of a section of the roof on a building that houses her firm's computer operations. According to her assistant there are three options which merit consideration: A, B, and C. Moreover, there are three possible future conditions that must be included in the analysis: I, which has a probability of occurrence of .5; II, which has a probability of .3; and III, which has a probability of .2.
If condition I materializes, A will cost $12,000, B will cost $20,000, and C will cost $16,000. If condition II materializes, the costs will be $15,000 for A, $18,000 for B, and $14,000 for C. If condition III materializes, the costs will be $10,000 for A, $15,000 for B, and $19,000 for C.
(A) Draw a decision tree for this problem.
(B) Using expected monetary value, which alternative should be chosen?

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Definitions:

Boss System

A political system dominated by a single leader or group of leaders (bosses) who have enough power to control political appointments, the distribution of favors, and the outcome of elections.

Civil Rights

The rights of individuals to receive equal treatment (and to be free from unfair treatment or discrimination) in a number of settings – including education, employment, housing, and more – based on certain legally-protected characteristics.

Society of American Indians

A progressive organization founded in the early 20th century, aiming to promote the rights and welfare of Native Americans.

Health Care

The organized provision of medical services to individuals or communities, including prevention, diagnosis, treatment, and management of illnesses, diseases, and other physical and mental impairments.