Decision tree problem

1. 8.850.000$ Total wins • 7.500.000$ Production costs • 1.000.000$ CAD costs • 350.000$ Net result 59% 0.9 425.000$ • 9.600.000$ Total wins • 7.500.000$ Production costs • 1.000.000$ CAD costs • 1.000.000$ Net result A Decision tree problem Sarah King, president of King Electronics, Inc., has two design options for her new line of high-resolution cathode-ray tubes (CRTs) for computer-aided design workstations. The life cycle sales forecast for the CRT is 100.000 units. Design option A has a 0.90 probability of yielding 59 good CRTs per 100 and a .10 probability of yielding 64 food CRTs per 100. This design will cost $1.000.000. Design option B has 0.80 probability of yieldin 64 good units per 100 and a 0.20 probability of yielding 59 good units per 100. This design will cost $1.350.000. Good or bad, each CRT will cost $75. Each good CRT will sell for $150. Bad CRTs are destroyed and have no salvage value. Because units break up when thrown in the trash, there is little disposal cost. Therefore, we ignore any disposal costs in this problem. 0.1 64% • 9.600.000$ Total wins • 7.500.000$ Production costs • 1.350.000$ CAD costs • 750.000$ Net result 600.000$ 0.8 64% B • 8.850.000$ Total wins • 7.500.000$ Production costs • 1.350.000$ CAD costs • 0$ Net result 0.2 59% Do nothing 0 $ 0 $