Best scenario for the bank using a decision tree analysis

Assignment Help Basic Statistics
Reference no: EM1385978

The management of Cecilia First Bank was concerned about the potential loss that might occur in the even of a physical catastrophe such as a power failure or fire. The bank estimated the loss from one of these incidents could be as much as $100 million including the losses due to interrupted service and cusotmer relations. The cost of the generator is $800,000 and if it is installed, no losses from any incidents will be incurred. However, if it is not installed, there is 10% chance that a power outage will occur during the next year. If there is an outage, there is a .05 probability that the resulting losses will be very large, approximately $ 80 million in lost earnings. Also, it is estimated that there is a .95 probability of only slight losses of around $ 1 million. What is the best scenario for the bank, as when using a decision tree analysis, whether the bank should buy a new generator or not?

Reference no: EM1385978

Questions Cloud

Find the binomial probability distribution : Find the Binomial Probability Distribution, n=25 and p = .40 Find the probability P(8
Retroactive grade inflation : In your opinion, should Loyola Law School have retroactively inflated students' grades and Explain why Kant might render such a judgment. Would Kant recommend actions such as those undertaken by Loyola Law School? Why or why not?.
Explain current standards and policies with star clothing : In context of telecommunications standards and policy, create 3-5 page white paper which explains current standards and policies which are suitable to MCG's work with Star Clothing.
Type of reveal the computer : Discuss why you think these questions would be the type to reveal the computer to be a computer?
Best scenario for the bank using a decision tree analysis : If there is an outage, there is a .05 probability that the resulting losses will be very large, approximately $ 80 million in lost earnings. Also, it is estimated that there is a .95 probability of only slight losses of around $ 1 million. What is..
Find the genotypes and proportions of the progeny : Assume the mouse autosomal genes B and S are linked and 38 map units apart. Genotypes B S/B S and b s/b s are intercrossed to produce the F1.
Discuss how supply and demand would be affected : Discuss how supply and demand would be affected under each of the four degrees of competition (pure competition, monopolistic competition, oligopoly, and monopoly)
He was now looking for expansion of his business : He was now looking for expansion of his business and decided to venture into Road transportation business between Chennai and Mumbai and Mumbai and Delhi as he felt that he could do well on this line
Describe how sites must be interconnected : Describe how the sites must be interconnected, where main data store will be located, how sites will connect to it, and what security measures will be implemented.

Reviews

Write a Review

 

Basic Statistics Questions & Answers

  Value of test statistic utilizing one sample proportion test

Find out the value of test statistic utilizing one sample proportion testing. Use the subsequent information for the below questions.

  Find out the forecast value utilizing three month

Find out  the forecast value utilizing three month moving average method, weighted moving average method, exponential smoothing and regression methods.

  Linear programming models

LINEAR PROGRAMMING MODELS

  Find the confidence interval for the proportion

A recent study of 75 workers found that 53 people rode the bus to work each day.  Find the 95 percent confidence interval of the proportion of all workers who rode the bus to work.

  Determining confidence interval for population variance

Suppose normality, determine a 90% confidence interval for population variance.

  Computing average daily rainfall in week

Compute average daily rainfall in the week and for weekends. Get the average of weekdays' rainfalls and average of weekend's rainfalls.

  Determining value of the test statistic

Determine the calculated value of the test statistic? What distribution does test statistic have when null hypothesis is true?

  Probability of average iq from random sample

What is the probability that the average IQ, from a random sample of 64 individuals, is greater than 102?

  Determine the probability that none of the contracts

Determining probability values using the Binomial distribution.Use the Binomial distribution to determine the probability that four or more of the contracts are in breach of the tendering guidelines.

  Margin of error with confidence

An SRS of 100 of a certain popular model car in 1993 found that 20 had a certain minor defect in the brakes. An SRS of 400 of this model car in 1994 found that 50 had the minor defect in the brakes. Let p1 and p2 be the proportion of all cars of t..

  Computing five key percentiles for data

Compute mean, standard deviation, coefficient of variation and 5 key percentiles for these data.

  Determining largest village in terms of population

Determine the largest village in terms of the population?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd