Construct a sequential decision tree

Assignment Help Business Management
Reference no: EM131269503

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 110 million. The company estimates that it has a 60% chance of winning the contract with this bid. If the firm wins the contract, it can choose one of three methods for getting the oil from the shale. It can develop a new method for oil extraction, use an existing (inefficient) process, or subcontract the processing to a number of smaller companies once the shale has been excavated. The results from these alternatives are as follows:

Develop new process:

Outcomes

Probability

Profit (,000,000s)

Great success

.30

$ 600

Moderate success

.60

300

Failure

.10

-100

Use present process:

Outcomes

Probability

Profit (,000,000s)

Great success

.50

$ 300

Moderate success

.30

200

Failure

.20

-40

Subcontract:

Outcome

Probability

Profit (,000,000s)

Moderate success

1.00

250

The cost of preparing the contract proposal is 2 million. If the company does not make a bid, it will invest in an alternative venture with a guaranteed profit of 30 million. Construct a sequential decision tree for this decision situation and determine whether the company should make a bid.

Reference no: EM131269503

Questions Cloud

Ability to consume and implement change : Students will learn to assess how an organization's culture and strategy may impact the ability to consume and implement change, comprehend the different types of organizational structures, and how this may impact change initiatives. Students will..
Products utilize two different types of lumber : A furniture manufacturer wishes to determine how many tables, chairs, desks or bookcases he should make in order to optimize the use of his available resources. These products utilize two different types of lumber, and he has on hand 1,500 board feet..
Explain the difference between a unitary and a federal state : Briefly explain the difference between a unitary state and a federal state. Explain the principles of constitutional design. In your opinion, does the U.S. Constitution meet these principles? Explain why.
What are the sounds and smells : How is the theater experience different from home viewing? Do you prefer the theater experience or home experience? Why or why not? What genre of film did you attend? Does the theater experience add or distract from this type of genre?
Construct a sequential decision tree : 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 110 million.
Why organizations can have higher productivity : Determine why organizations can have higher productivity when top managers encourage supervisors to set goals, assess performance, and provide feedback to employees.
We have all been part of many teams : We've all been part of many teams. Share with the class a bit about a team you recall being a part of that was a positive experience. It can be a team that was together for a very short time or years. What factors do you recall that made it such a..
Established building materials manufacturer : Eric is a sales rep for an established building materials manufacturer. Business is good, but he's concerned that the company has spent little on new product development and hasn't created a new product in over five years. Without new products, Eric ..
Write a response for each given discussion question : Write a response for each discussion Question. The Affordable Care Act is a health care reform that was implemented to help provide insurance to individuals who had no insurance through the public programs or through an employer.

Reviews

Write a Review

Business Management Questions & Answers

  What are the current employment opportunities

What is the club's mission, who are the primary clientele and what are the current employment opportunities?

  Diagnostic regulatory guidelineshelp me describe societys

diagnostic regulatory guidelineshelp me describe societys relationship in diagnostic regulatory guidelines.diagnostic

  Business of importing and supplying jewellery as wholesaler

Andrew, Brian, Colin, Diana and Elizabeth were the directors of Gemsales Pty Ltd, a company engaged in the business of importing and supplying jewellery as wholesalers to the local market.

  Describe the measureable value

Improved order fulfillment = 10-20% decrease in order to delivery time. This will improve customer satisfaction and retentionImproved data accuracy

  The practice of hiring and training

What impact, if any, has the practice of hiring and training employees with disabilities had on operations and management decision making? What motivated the managers of these two companies to begin this hiring practice?

  Corporate governance in the usone of the most significant

corporate governance in the u.s.one of the most significant debates about corporate governance centers on whether the

  Social implications of real world business practices

You will consider the legal, ethical, and social implications of real world business practices. Find an example of a business facing a legal, ethical, and/or social responsibility dilemma.

  Change in management in past 5-10 years and next 5-10

change in management in past 5-10 years and next 5-10 yearshow has management changed over the last 5-10 years? how do

  Elements of the consumer decision-making process

Summarize the elements of the consumer decision-making process.

  Create three fictional incidents for home healthcare

Create three fictional incidents for home healthcare. Write about each scenario in not more than a page. Include the following information about each scenario:

  Explain how consumers buying habits may change

Explain how consumers' buying habits may change during a recessionary period. - Write a memo to the company president explaining how the firm may have to alter its marketing mix.

  Leading design functional role expectations strategy and

leading design functional role expectations strategy and shaping by a leader1. identify an organization and its leader

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd