Reconsider the Goferbroke Co. case study, including the application of utilities in Section 9.9. Max Flyer now has decided that, given the company’s precarious financial situation, he needs to take a much more risk-averse approach to the problem.
Therefore, he has revised the utilities given in Table 9.9 as follows: U (- 130) = 0, U (- 100) = 0.07, U (60) = 0.40, U (90) = 0.45, U (670) = 0.99, and U (700) = 1.
a. Analyze the revised decision tree corresponding to Figure 9.23 by hand to obtain the new optimal policy.
FIGURE 9.3: The Decision Tree dialog box used to specify that the initial node of the first Goferbroke problem is a decision node with two branches, Drill and Sell, with values (partial payoffs) of 2100 and 90, respectively.
b. Use RSPE to construct and solve this revised decision tree?
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