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Unformatted text preview: To: 0290 Markers
From: Brian G
Date: November 22, 2007 Marking notes: Homework #4 (07W) 1. No students should lose any marks for presentation unless you are offended by
their submission ( hard to read the numbers, tree is a mess, hard to follow etc.) 2. Max deduction for very poor presentation: 8 marks ( 20% of 40). 99.9% of all
students should not lose any marks for presentation. 3. The problem, as stated in the book, uses payoff numbers like 15 (which means
$15,000). Answers can be written as follows: Correct answer( Good answer but Correct answer(
probabilities problem with units probabilities
rounded to 3 rounded to 2
places) places) — $14,000 $14 $14,000
$2,000 $2,000 $10,500 $10.5 $10,500 see marking scheme below Students should lose a MAXlMUM of 1 mark in TOTAL FOR ALL PARTS (b through g)
if they leave their answers as 14, 2 10.5 etc as above. 4. Accuracy of answers in part (e) and (f) will depend on how the probabilities were
rounded ( 3 places or 2 places). Do NOT deduct for using 2 or more places; do
deduct if they round to 1 decimal place. 5. On probability trees, if they do not use boxes and circles ( or if they interchange
them) then deduct 3 marks for each question where this error occurs. 6. The page titled “ Probability calculations for part (e) is included as part of the
answer key but students are not expected to add a page like I did. They should
show their calculations at the bottom of page 4 ( if there is room) or put them on
the back of one of the other pages ( back of page 3 makes the most sense as they can see the numbers they need to put on the tree in part (e).) 7. Marking Part (e) 16 marks in total Tree structure: 8 marks Probabilities: 3 marks Payoﬁs; ‘ 2 marks Optimal Decision:
As long as the consultant....Choose HIRE 1 mark
If I, Then choose d3 1 mark
If Not I, then choose d1 1 mark 8. Other marks are as noted on the paper. Any questions, please call. Cheers, Brian COMMERCE 290 HOMEWORK #6
Due: Thursday, November 22, 2007 before 12:00 noon Completed homework must be handed into the Commerce 290 Homework Mailboxes located on the third floor of the Henry Angus Building. These. Mailboxes are located across
the hall from HA 308. Note: As you know from the course outline, some homework assignments are completed
individually and others are completed in groups. This homework is to be completed by individual students only. Students are reminded 'not to work in groups, not to discuss
your homework with others and this includes using the Course Dichssion Forum as a means
of communication for this homework. This is NOT a group work homework. DIRECTIONS: 1. For Question #1, write all your answers in the indicated
spaces and show all work on this paper. No additional
pages will be accepted ' ' 2. Show all work on this homework paper. No credit for
answers onlyt _ 3. Be sure to include your units in each answer. Last Name: .  First Name: 6 Q L. U T‘ Ia ix) 
Student Number: .
Signature: _ Excel Lab Number: 7 Marks Awarded 7 _ ' Page 1 of 5 . Question 1 (40 marks) Do the OMB Textbook Problem 23 ( Chapter 4). Assume the payoffs listed in the '
textbook are measured in units of $1,000. Thus, for example, $15 would mean $15,000.
Answer only the questions below in the space provided. (a) (3 marks) Using the Optimistic approach, determine the best decision. 2 WLZV‘C‘; .13} Jamar/1; (b) (8 marks) Use a properly constructed decision tree and the EMV approach to
" recommend a decision. Be sure to identify the correct decision and the expected
proﬁt. ‘ 5’ 4 )5"
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l (C) (d) (4 marks) If management could obtain perfect information regarding the states of
nature, what is the most they shouid be willing to pay for this information? if 10
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W (4 marks) For this question only. The estimated rpayoff for d1 and 31 is $15.
For management to choose a different decision than they found in part (b)
above, determine the new value for this payoff. ﬂ Pﬁjfm Mgr,” a. Maui: QM Pau— Le) warm! toe:
. J2 _ . . , Sac 43,200) 4’ '0“! ,1 etc + 2. A 10,4, ' f
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Page3of5 ' \é veaéw 740 mar/(crawl maﬁa? 21424464 ”*9 _' (e) (16 marks) Suppose management has the option of hiring a consultant who, i
before they make a decision on d1, d2 or d3, could provide sample information
"I" or “Not I” with P( I  51) = 0.20 and P( l  32) = 0.75. What is the optima!
decision strategy now ? [2.58 (579141‘ i5‘ 0% 09’ ‘qu A.
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Mn {/3 31.0 5’ [14392.09 {95070.} E Page4of5 . Bart AM lst’y HthE 2515’ [(1 I’M/KM ahmszc/a
”(1,6 rut/7*; u' u dr' W792 (at(.’l” C3LCuI3—h0'4ré 9”“ Perth (,3) ' Lug. [(Mou: ‘ ' ,2
W A! / ?Cdt3:’3 43' ”I 4 3: _&"f {if/11]“:«7r ﬂ> ‘ IPETi’il]: '2 — '1 A y? 427:“: ’5'
r 1 ' PEIldiJ: .75 . '2), _ . varf 33? 05 {£de Prﬂlﬁa(ar'l‘ky ‘h’vee' («U6w Odds’f‘w/cff z #5 ‘ (f) (9) (3 marks) What is the expected value of obtaining the consultant’s report? EV9I : EPﬁI" EMV  j G) _; y/eﬁaezmre Now” 5/ :i' (Q :. 3 gayﬂ 5’
W, (2 marks) What is the efficiency of this information? EECIQMCj 3: Eva: 24 ”0%? j 0 END: 7 d
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 Winter '09
 Brian

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