Fold back the decision tree shown below. Which of the following is correct based on folding back the above tree?
A)Choose alternative 1 for an expected value of 400.
B)Choose alternative 2 for an expected value of 580.
C)Choose alternative 2 for and expected value of 560.
D)The two alternatives are tied.

Question

Fold back the decision tree shown below.  Which of the following is correct based on folding back the above tree?
A)Choose alternative 1 for an expected value of 400. 
B)Choose alternative 2 for an expected value of 580. 
C)Choose alternative 2 for and expected value of 560. 
D)The two alternatives are tied.

Quizplus · Accepted Answer

Folding back the decision tree, we can calculate the expected value for each alternative. 
Alternative 1: 
(0.6)(800) + (0.4)(0) = 480 
Alternative 2: 
(0.6)(600) + (0.2)(800) + (0.2)(300) = 580
Therefore, the best choice is Alternative 2 with an expected value of 580.

Fold Back the Decision Tree Shown Below