Probability Analysis and The Decision Tree Model Application
A General Manger of Harley-Davidson has to decide on the size of a new facility. The GM has narrowed the choices to two: large facility or small facility. The company has collected information on the payoffs. It now has to decide which option is the best using probability analysis, the decision tree model, and expected monetary value.probability and respective payoffs: Build Small: Low Demand0.4($40)=$16High Demand0.6($55)=$33Build Large:Low Demand0.4($50)=$20High Demand0.6($70)=$42Determination of Expected Value of each alternative
Build Small: $16+$33=$49
Build Large: $20+$42=$62Click here for the Statistical Terms review sheet. Submit your conclusion in a Word document to the Submissions Area by the due date assigned.
Assignment 2 Grading CriteriaMaximum Points
The diagram is accurate and labeled correctly. The diagram clearly illustrates the sequence of events and their probability of occurrences.32A step-by-step breakdown of the calculations for the chance of probability and respective payoff is clearly communicated. The results of the calculations are accurate.28Clear and concise statement explaining the decision and a description of elements that lead to the decision.20Clear and concise statement explaining the decision and a description of elements that lead to the decision.
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