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Unformatted text preview: Seismic Results Dry(d) Reasonably good(g) Bonanza(b) No structure(N) 0.7 0.3 0.1 Open(O) 0.2 0.3 0.4 Closed (C ) 0.1 0.4 0.5 That is P (N/D) =0.7; P (O/G) =0.3, P(C/B) =0.5 After you have computed the revised probabilities round to two decimal places a) Construct the appropriate decision tree to help the oil company make the appropriate decisions. This tree must be constructed in logical order with labels and net payoffs. It also includes the revised probabilities b) Fold back the decision tree) to determine the best strategy for the company; you must state this strategy . What is the final expected profit? c) What is the expected value of sample information(EVSI)- the most that should be paid to seismic testing firm for the test? d) Calculate the expected value of perfect information (EVPI)- the most that should be paid to an expert for perfect prediction of the uncertain outcomes e) What is the efficiency of sample information...
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- Spring '11