Forums Homework Help To draw a decision tree you may

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    A manufacturer of computer games is contemplating introducing a new game. The marketing manager of the company believes the new game will have a low demand or a high demand which she assessed as 0.55 and 0.45 respectively. If the product captures only a low market share (low demand for the product), the company could lose 8 million dollars whereas a high market share (high demand for the product) could produce a 10 million dollar profit. If the company decides not to begin production of the new game, there will be no profit or loss. The marketing manager is considering hiring a market survey group at a cost of $120,000 to randomly select a sample of potential buyers of the game. The sample of potential buyers would have the opportunity to test the game preparatory to declaring their intention to buy the game or not. Historically, the market survey group predicted the sample of potential buyers would buy 90% of the time when demand turned out to be high and not buy 80% of the time when demand turned out to be low. Draw a full decision tree to help the marketing manager make wise decisions (calculate the EVSI and state the two decisions).

    The following two pages have been left intentionally blank for your answer to question To draw a decision tree you may:

    Use Excel tree170a.xla to generate a decision tree, or

    Draw the tree by hand and scan it, or

    Use Excel drawing tool insert – shapes

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