Extra Problem 7 - Sensitivity Analysis - Billion and then...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
EMGT 269 - Elements of Problem Solving and Decision Making Instructor: Dr. J. R. van Dorp 1 EXTRA PROBLEM 7: SENSITIVITY ANALYSIS (Problem 5.12 in the Book) Reconsider Hugh Liedtke’s Decison as diagrammed below Low (1-p-q) High (p) 10.3 0 Medium (q) 5 Final Court Decision Accept $3 Billion Refuse Low (1-p-q) High (p) 10.3 0 Medium (q) 5 Final Court Decision 5 2 Max Result 3 Accept $2 Billion Counteroffer $5 Billion Texaco Accepts $5 Billion (0.17) Texaco Refuses (0.50) Counteroffer Texaco Counter - offers $3 Billion (0.33) Note that three strategies are possible: (1) Accept $2 billion, (2) Counteroffer $5 Billion and then accept $3 Billion if Texaco counteroffers, and (3) Counteroffer $5
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Billion and then refuse $3 Billion if Texaco counteroffers. A. Create a two-way sensitivity graph that shows optimal strategies for Liedtke for all possible values of p and q EMGT 269 - Elements of Problem Solving and Decision Making Instructor: Dr. J. R. van Dorp 2 EMGT 269 - Elements of Problem Solving and Decision Making Instructor: Dr. J. R. van Dorp 3 B. If Liedtke thinks that p must be at least 0.15 and q must be more than 0.35 can he make the decision without further probability assessment....
View Full Document

This note was uploaded on 04/04/2012 for the course CIVIL ENG CIV 125 taught by Professor Prof.chang during the Summer '11 term at International School of Management, New York.

Page1 / 3

Extra Problem 7 - Sensitivity Analysis - Billion and then...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online