Decision Making

Trees of decision
Proposed Exercises 1. A company which object is the sale of cars of the second hand receives 10 % of commission on the sales. The above mentioned company has received the order of a client of sold three cars of his property, the first one of them the flaming utilitarian one valued for 10.000 Euros, second the sports one valued for 60.000 Euros and the third party a four-wheel drive vehicle 4x4 almost new Turbocharger which valuation ascends to 100.000 Euros. The clauses agreed in the order between the client and the company establishes that necessarily it utilitarian must be sold firstly in the space of one month, in opposite case the order remains annulled. Sold the utilitarian one, the company the sports one, the all area can choose to sell, or to cancel the order. Finally, once sold the second vehicle, the company will be able to cancel the order or to sell the third car. The advertising expenses that the company estimates will be necessary to sell the above mentioned cars as well as the probability of selling each of them, they come given in the following table

Utilitarian Sports 4x4

Expenses Advertising 3.000 1.000 2.000

Probabilit y 40% 70% 60%

a) To determine if the manager of the company has to or not to accept the order that the client formalizes. b) If there is not known the probability of selling the utilitarian car, for what range of probabilities of selling the utilitarian one should it the manager accept the order? c) The manager of the company knows an important pilot of careers who can provide information to him hundred for hundred trustworthy with the cars that it will manage to sell, as well as the order in which it will achieve the above mentioned sales. Calculate what the manager would be ready to pay the pilot for providing the above mentioned information to him.

2. A businessman acquires fresh fish on the central market for his later sale. Every box of fish identifies her like excellently or not excellently depending on the percentage of fish that is considered of excellent quality. A box of excellent fish contains 90 % of fish of high quality, whereas a box of not excellent fish contains only 20 % of fish of high quality. A box of excellent fish generates a benefit of 100 Euros, where as a box of not excellent fish causes a few losses of 100 Euros for the bad image of the company that the clients take to themselves. Before buying a box the businessman can verify the quality of the same one extracting a copy of fish with the aim to check if it is a question or not of fish of high quality. Establish the strategy that the businessman must follow, as well as the cost of the information.

3. It is considering to construct a new section in his business of snack food, though it does not know if to do the new big or small section. At the same time it appears if there assembles information about the foreseen sales or if on the contrary it does not do anything. The information about the foreseen sales can advise him an increasing market or a diminishing market, being 500 Euros the cost of the above mentioned information, and the probability of which the information is favorably of 60 %.If the market is increasing the foreseen earnings are 9.000 Euros if the section is big and 3.000 if it is small. If the market is diminishing it can lose 10.000 Euros if the section is big and 5.000 if it is small. If additional information does not assemble, the estimation of probabilities of which the market is increasing is 60 %, by contrast a favorably report would increase the probability of an increasing market to 80 % and an unfavorable report would diminish the probability of an increasing market to 40 %. Indicate the decision that must take.