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0.4
Low
-20
-20 -20

0.5
Option 1 Medium
-20
0 -8 -20 -20

0.1
High
100
100 100

0.1
Low
-60
-60 -60

0.3
Option 2 Medium
2 20
36 0 36 20 20

0.6
High
60
60 60

0.05
Low
-100
-100 -100

0.15
Option 3 Medium
-60
0 2 -60 -60

0.8
High
20
20 20

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a) Describe the company's decision making

1. What is the problem
An entertainment company which organize a pop concert in London has to decide how much mo
that they should spend on publicizing the event by looking through the demand.

2. What are decision node for the problem

The decision node is how much the company should spend on the publicizing

3. What are SON (State Of Nature) for the problem

1. Advertise only in the music press
2. As option 1 but also advertise in the national press
3. As option 1 and 2 but also advertise on commercial radio

4. What are the company's payoff?

The payoff of the company's is the demand of the ticket. The company will get profit from the tic

b) With information from (a), construct a decision tree

(The decision tree is as seen on the left sides)

c) Determine the option which lead to the highest expected profit

Option 2, publish in the music press and also advertise in the national press. Because option 2 have the highes
Meanwhile, option 1 and option 3 are -8 and 2.

d) Would you have any reservations about recommending this option to the company?

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on has to decide how much money

h the demand.

publicizing

pany will get profit from the ticket sales

cause option 2 have the highest profit which is 36.

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ID Name Value Prob Pred Kind NS

0 TreePlan 0 0 0D 3
1 0 0E 3
2 0 0E 3
3 0 0E 3
4 1T 0
5 1T 0
6 1T 0
7 2T 0

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8 2T 0
9 2T 0
10 3T 0
11 3T 0
12 3T 0

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S1 S2 S3 S4 S5 Row Col Mark

1 2 3 0 0 22 1 1
4 5 6 0 0 7 5 1
7 8 9 0 0 22 5 1
10 11 12 0 0 37 5 1
0 0 0 0 0 2 9 1
0 0 0 0 0 7 9 1
0 0 0 0 0 12 9 1
0 0 0 0 0 17 9 1

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0 0 0 0 0 22 9 1
0 0 0 0 0 27 9 1
0 0 0 0 0 32 9 1
0 0 0 0 0 37 9 1
0 0 0 0 0 42 9 1

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0.75
High circulation
0.3
Launch before the rival 4000000

0 3250000 0.25
Low circulation

Launch in April 1000000

0 3047000 0.7
High circulation
0.7
Launch after the rival 3800000

0 2960000 0.3
Low circulation

1000000
1
3047000 0.75
High circulation
0.8
Launch before the rival 4000000

0 2750000 0.25
Low circulation

Launch in January 1000000

-500000 2692000 0.7

High circulation
0.2
Launch after the rival 3800000

0 2460000 0.3
Low circulation

1000000

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High circulation
4000000 1. Draw the decision tree to represent Westward's problem.
4000000 (The decision tree is as seen on the left sides)

2. Assuming that Westward's objective is to maximize expected profit, determine

ow circulation the policy that they should choose.
1000000 Launch in April and before the rival
1000000
3. In reality, Westward have little knowledge of the progress which has been mad
by the rival. This means that the probabilities given above for beating the rival
High circulation the launch is, or is not, brought forward) are very rough estimates. How sensiti
3800000 is the policy you identified in (b) to changes in these probabilities?
3800000 There is no changes in the result of the best decision in maximize ex
The policy is not really sensitive to changes in these probabilities.

ow circulation
1000000
1000000

High circulation
3500000
3500000

ow circulation
500000
500000

High circulation
3300000
3300000

ow circulation
500000
500000

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e expected profit, determine

rogress which has been made

n above for beating the rival (if
ough estimates. How sensitive
se probabilities?
best decision in maximize expected profit.
ges in these probabilities.

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ID Name Value Prob Pred Kind NS S1

0 TreePlan 0 0 0D 2 1
1 0 0E 2 3
2 0 0E 2 5
3 1E 2 7
4 1E 2 9
5 2E 2 11
6 2E 2 13
7 3T 0 0

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8 3T 0 0
9 4T 0 0
10 4T 0 0
11 5T 0 0
12 5T 0 0
13 6T 0 0
14 6T 0 0

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S2 S3 S4 S5 Row Col Mark

2 0 0 0 19 1 1
4 0 0 0 9 5 1
6 0 0 0 29 5 1
8 0 0 0 4 9 1
10 0 0 0 14 9 1
12 0 0 0 24 9 1
14 0 0 0 34 9 1
0 0 0 0 2 13 1

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0 0 0 0 7 13 1
0 0 0 0 12 13 1
0 0 0 0 17 13 1
0 0 0 0 22 13 1
0 0 0 0 27 13 1
0 0 0 0 32 13 1
0 0 0 0 37 13 1

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