What are their best choices and expected costs

Reference no: EM131426696

The Newisham Reservoir

Newisham has a population of about 30,000. It traditionally got its water supply from the nearby River Feltham but increasing quantities of water were being extracted from the river by industry upstream. When the flow reaching the Newisham water treatment works became too small to supply the town's needs, the council decided to build a reservoir by damming the Feltham and diverting tributaries. This work was finished in 2002 and gave a guaranteed supply of water to the town. Unfortunately, the dam reduced the amount of water available to farmers downstream, and two of them recently found the water supply to their cattle had effectively dried up. The farmers now face the option of either connecting to the local mains water supply at a cost of £44,000 or drilling a new well. The drilling company cannot give an exact cost for the work but suggest guidelines of £32,000 (with a probability of 0.3), £44,000 (with a probability of 0.3) or £56,000, depending on the underground rock structure and depth of water. A local water survey company can do some more onsite tests. For a cost of £600 they will give either a favourable or an unfavourable report on the chances of easily finding water. The reliability of this report (phrased in terms of the probability of a favourable report, given that the drilling cost will be low etc.) is given in this table:

Questions

1. What would a decision tree of the farmers' problem look like?

2. What are their best choices and expected costs?

Reference no: EM131426696

Questions Cloud

Demonstrates the pros and cons of performance evaluations : When there is some sort of structure with reviews, it helps ensure that the topics that need to be addressed have been. Furthermore, any form of performance review should include two positives to one negative. What is some evidence that demonstrates ..

Trade deficit a problem for the country : Question 1: If the exports increase and the imports decrease, then what will happen to the trade deficit? Will this help or hurt the U.S.? In what ways is a bigger trade deficit a problem for the country?

Outsource new toxic-free miracle carpet cleaner : ABC Company must decide whether to insource or outsource a new toxic-free miracle carpet cleaner that works with its new equipment. If it decides to insource the product, the process would incur $600,000 of annual fixed costs and $3.0 per unit of var..

What is amount of inventory inside the process boundaries : Linear Process Evaluation Patients per hour 55, Buffer 1 has 7 patients waiting, Buffer 2 has 34 patients waiting, the registration takes 2 minutes and the doctor takes 13 minutes Complete the table above based on the process diagram. What is amount ..

What are their best choices and expected costs : What would a decision tree of the farmers' problem look like?

Explain the management and profitability impacts : Choose two examples and explain the management and profitability impacts of these two issues.

What does this say about the manufacturer''s claim : To test this, a consumer group found the cost of maintaining 10 cars for a year, and the mean saving was €79 with a standard deviation of €20. What does this say about the manufacturer's claim?

Sole proprietorship the most flexible type of business : What is a sole proprietorship the most flexible type of business? Some top administrators believe that they should welcome congressional oversight in areas in which committees or members have legitimate concerns. Why not just pay employees whatever i..

Monetary policies as expansionary or contractionary : Classify each of the following monetary policies as expansionary or contractionary. a) The Central Bank of England has recently decided to raise reserve requirementson deposits below GBP 500K from 10% to 11%.

User Account

All Pages