Which alternative is the best choice

Reference no: EM13195906

two pumping system 'A' and 'B' are proposed for supplying water to a residential area. the construction cost for system 'A' is 250,000 and for system 'B' is 750,000. if partial failure occurs, it is expected that the damage cost for system 'A' is 80,000 and for system 'B' is 15,000. if complete failure occurs, it is expected that the damage cost for system 'A' is 450,000 and for system 'B' is 400,000. the probabilities of partial and complete failures are 5% and 1% respectively.

a) draw a decision tree to represent this problem.

b) which alternative is the best choice? and why?

Reference no: EM13195906

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