Draw an appropriate decision tree

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Reference no: EM131360442

Problem -

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 nurses. The table below shows the expected costs of the two options for three possible demand levels:

	States of Nature
Alternatives	Low Demand	Medium Demand	High Demand
Hire full-time	$300	$500	$700
Hire part-time	$0	$350	$1,000
Probabilities	.2	.5	.3

a) Using expected value, what should Ms. Johnson do?

b) Draw an appropriate decision tree showing payoffs and probabilities.

Reference no: EM131360442

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