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Decission trees

Decission trees. 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.

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Decission trees

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  1. Decission trees • 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’s little disposal cost. Therefore, we ignore any disposal costs in this problem.

  2. 0.9*59% (0.9*0.59+0.1*0.64)*100000*150 -1000000 -7500000 _____________________ 425000 A 0.1*64% 0.8*64% (0.8*0.64+0.2*0.59)*100000*150 -1350000 -7500000 _____________________ 600000 B 0.2*59%

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