Finding decision strategy and expected value of strategy

Reference no: EM1321946

Q1) Miramar Company is considering contracting with market research firm to do survey to find out future market conditions. Results of survey will point to either positive or negative market conditions. There is .60 probability of positive report, given favourable conditions; a .30 probability of positive report, given stable conditions; and.10 probability of positive report, given unfavourable conditions. There is.90 probability of negative report, given unfavourable conditions;.70 probability, given stable conditions; and.40 probability, given favourable conditions. Using decision tree analysis and posterior probability tables, find out the decision strategy company must follow, expected value of strategy, and maximum amount the company must pay market research firm for survey results.

Reference no: EM1321946

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