Construct a sequential decision tree

Assignment Help Business Management
Reference no: EM131269503

The Americo Oil Company is considering making a bid for a shale oil development contract to be awarded by the federal government. The company has decided to bid 110 million. The company estimates that it has a 60% chance of winning the contract with this bid. If the firm wins the contract, it can choose one of three methods for getting the oil from the shale. It can develop a new method for oil extraction, use an existing (inefficient) process, or subcontract the processing to a number of smaller companies once the shale has been excavated. The results from these alternatives are as follows:

Develop new process:

Outcomes

Probability

Profit (,000,000s)

Great success

.30

$ 600

Moderate success

.60

300

Failure

.10

-100

Use present process:

Outcomes

Probability

Profit (,000,000s)

Great success

.50

$ 300

Moderate success

.30

200

Failure

.20

-40

Subcontract:

Outcome

Probability

Profit (,000,000s)

Moderate success

1.00

250

The cost of preparing the contract proposal is 2 million. If the company does not make a bid, it will invest in an alternative venture with a guaranteed profit of 30 million. Construct a sequential decision tree for this decision situation and determine whether the company should make a bid.

Reference no: EM131269503

Questions Cloud

Ability to consume and implement change : Students will learn to assess how an organization's culture and strategy may impact the ability to consume and implement change, comprehend the different types of organizational structures, and how this may impact change initiatives. Students will..
Products utilize two different types of lumber : A furniture manufacturer wishes to determine how many tables, chairs, desks or bookcases he should make in order to optimize the use of his available resources. These products utilize two different types of lumber, and he has on hand 1,500 board feet..
Explain the difference between a unitary and a federal state : Briefly explain the difference between a unitary state and a federal state. Explain the principles of constitutional design. In your opinion, does the U.S. Constitution meet these principles? Explain why.
What are the sounds and smells : How is the theater experience different from home viewing? Do you prefer the theater experience or home experience? Why or why not? What genre of film did you attend? Does the theater experience add or distract from this type of genre?
Construct a sequential decision tree : The Americo Oil Company is considering making a bid for a shale oil development contract to be awarded by the federal government. The company has decided to bid 110 million.
Why organizations can have higher productivity : Determine why organizations can have higher productivity when top managers encourage supervisors to set goals, assess performance, and provide feedback to employees.
We have all been part of many teams : We've all been part of many teams. Share with the class a bit about a team you recall being a part of that was a positive experience. It can be a team that was together for a very short time or years. What factors do you recall that made it such a..
Established building materials manufacturer : Eric is a sales rep for an established building materials manufacturer. Business is good, but he's concerned that the company has spent little on new product development and hasn't created a new product in over five years. Without new products, Eric ..
Write a response for each given discussion question : Write a response for each discussion Question. The Affordable Care Act is a health care reform that was implemented to help provide insurance to individuals who had no insurance through the public programs or through an employer.

Reviews

Write a Review

Business Management Questions & Answers

  The main objective of business statistics

The main objective of Business Statistics is to make predictions and decisions about certain characteristics of a population based on information contained in a random sample from the entire population. The condition for randomness is essential to ma..

  Outsourcing business functions

What are/were your reactions? What did your company leadership give as notice and rationale for the action?

  Elucidate why do companies using a horizontal structure

Elucidate why do companies using a horizontal structure have cultures which emphasize openness, employee empowerment, and responsibility?

  Management of benefitssolarium inc ipo is a two-year-old

management of benefitssolarium inc. ipo is a two-year-old software development company. they did not provide any health

  Define the contested boundaries among amazon apple faceboo

Define the contested boundaries among Amazon, Apple, Facebook, and Google.

  Training for the healthcare professional

Estimate the cost of education and training for the healthcare professional you selected. Research the earnings of such a professional at entry-level, at mid career, and at the top of the career.

  Effective decision makers and problem solvers

Prepare an exhibition by choosing any format or structure you want on Resolving conflict within teams - Drawing on your experiences from this teamwork process, on academic literature and your personal reflections

  Implementation plan for southwest airlines

Write a Masters level, 500 to 600 word paper using the most recent data available: Create an implementation plan for Southwest Airlines;

  Worst recession since the great depression

In 2008, the world entered the worst recession since the Great Depression of the 1930s. What would you predict for airline supply and demand?

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Informal groups-structures-tasks-functional operations

These individuals suggest that the sheer number of formal and informal groups, structures, tasks, functional operations, and individual interactions that exist and occur within organizations (even moderate-sized ones) render the "management" of cu..

  Provide examples of organizations

Illustrate with actual examples of employers achieving this balance. Also, provide examples of organizations failing to achieve one or both and illustrate what might result. Talking about external competitiveness with inter equity.

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