Reference no: EM132629644
Q1. A. What is Decision Tree analysis? Explain decision making process without probabilities with example. B. Sheraz Roonak Restaurant is contemplating opening a new restaurant on Main Street. It has three different models, each with a different seating capacity. They estimated that the average number of customers per hour will be 100, 130, or 160. The payoff table for the three models is given below;
Average Number of Customers Per Hour
s1 = 100 s2 = 130 s3 = 160
P(s1) = 0.3 P(s2)= 0.2 p(s3)= 0.5
Model A $20,000 $14,000 $14,000
Model B $ 5,000 $17,000 $12,000
Model C $ 7,000 $19,000 $21,000
Requirements
1. Draw decision tree and computed expected value and decide about the best option.
2. Also find out the Expected Value of Perfect Information by using the probabilities given.