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We are considering an event for next June. Assume if we select an outdoor venue, we make 350,000 dollars, but if it rains we lose 40,000. If we select an indoor venue, we make 150,000 rain or not. It rains 1/3 of the night in June.
We can buy a forecast for 15,000. The track record of the forecaste is as follows:
When rain predicted: 80 percent of the time it actually rained, 20% no rain
When no rain predicted: 70% no rain, 30 percent rain.
We need to construct a decision tree to tell whether or not to buy the forecast.
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