Extra Problem 6 - Solving Decision Trees

# Extra Problem 6 - Solving Decision Trees - EMSE 269...

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EMSE 269 - Elements of Problem Solving and Decision Making Instructor: Dr. J. R. van Dorp 1 EXTRA PROBLEM 6: SOLVING DECISION TREES Read the following decision problem and answer the questions below. A manufacturer produces items that have a probability p of being defective. These items are formed into batches of 150. Past experience indicates that some are of good quality (i.e. p=0.05) and others are of bad quality (i.e. p=0.25). Furthermore, 80% of the batches produced are of good quality and 20% of the batches are of bad quality. These items are then used in an assembly, and ultimately their quality is determined before the final assembly leaves the plant. The manufacturer can either screen each item in a batch and replace defective items at a total average cost of \$10 per item or use the items directly without screening. If the latter action is chosen, the cost of rework is ultimately \$100 per defective item. For these data, the costs per batch can be calculated as follows: p = 0.05

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Extra Problem 6 - Solving Decision Trees - EMSE 269...

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