HIRE QUALIFIED ACADEMIC WRITERS
Individual Assignment 6610a) (20%) A group of medical professionals is considering the construction of a private clinic. If the medical demand is high the physician could realize a net profit of $100,000. If the market is not favourable they could lose $40,000. Their best guess is 50%-50% for the clinic to be successful. Construct the decision tree. EMV=Expected Monetary Value(b) (50%) The same physicians above have been approached by a market research company that offered to perform a study at a fee of $5,000. Using the Bayes’ theorem they make the following probabilities:Favorable market given a favorable study = .82Unfavorable market given a favorable study = .18Favorable market given unfavorable study = .11Probability of favorable research study = .55Probability of unfavorable research study = .45Develop the decision tree to reflect the probabilities abovec) (10%) Describe how you would determine the best decision using EMV criterion with a decision tree.d) (10%) What is the purpose of the utility theory?e) (10%) What information should be included into the decision tree?
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