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    clarisse jaramilla
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    The document presents two decision tree scenarios for a manager. The first scenario involves deciding whether to prepare a bid that has a 50% chance of being awarded, which could result in earning $100,000 or paying a $8,000 fine. The second scenario involves deciding whether to purchase a patent for $50,000 to develop a new product using either a modern method with 60% success chance or traditional method with 70% success chance, which could earn $500,000 if successful.

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    The document presents two decision tree scenarios for a manager. The first scenario involves deciding whether to prepare a bid that has a 50% chance of being awarded, which could result in earning $100,000 or paying a $8,000 fine. The second scenario involves deciding whether to purchase a patent for $50,000 to develop a new product using either a modern method with 60% success chance or traditional method with 70% success chance, which could earn $500,000 if successful.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    35 views1 page

    Decision Tree Activity

    Uploaded by

    clarisse jaramilla
    The document presents two decision tree scenarios for a manager. The first scenario involves deciding whether to prepare a bid that has a 50% chance of being awarded, which could result in earning $100,000 or paying a $8,000 fine. The second scenario involves deciding whether to purchase a patent for $50,000 to develop a new product using either a modern method with 60% success chance or traditional method with 70% success chance, which could earn $500,000 if successful.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    MNGT 21 – Management Science

    Decision Tree

    1. A manager has to decide whether to prepare a bid or not. It costs P5,000 to prepare
    the bid. If the bid is submitted, the probability that the contract will be awarded is
    50%. If the company is awarded the contract, it may earn an income of P100,000 if it
    succeeds, or pay a fine of P8,000 if it fails. The probability of success is estimated to
    be 80%. Should the manager prepare a bid? 

    Mr. del Mundo, the president of RFC Corporation is faced with deciding whether to
    purchase a patent to develop a new product or not. If the company purchases the
    patent, it should develop the product. The selling price of the patent if P50,000. There
    are two ways of developing the product: the Modern Method and the Traditional
    Method. It costs P20,000 to use the Modern Method, and P15,000 for the traditional
    Method. The proby of success in the Modern Method is 60%, while it is 70% for the
    Traditional Method. If the product is successfully developed, it will an income of
    P500,000. Should the company purchase the patent? If so, what method of
    development should be used?

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