What are the states of nature-the alternative

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Reference no: EM133615484

Question

If a large building, currently provided with the minimum fire protection, is not protected against file, the total damage could be as much as $3 million in case of a fire, whose probability of occurrence is 60 percent. However, a fire protection engineer has estimated that if sophisticated equipment work $0.75 million is provided, there is a probability that there would be no damage in the case of a fire.

1. What are the states of nature, the alternative, and their probability?

2. Construct a matrix and decision tree using this information and indicate if the sophisticated equipment should be installed.

Reference no: EM133615484

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