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Hi Sir,
i have watched your lecture on decision tree and i have understood it . But when doing this question i am confused how to draw the decision tree . How can you help me ?
Thanks in AdvanceI can’t really say any more than what I say in the lecture.
You work through logically from the start, showing what decisions will have to be made and which various outcomes can occur.
You can only really get it by practicing – your Revision Kit should have several questions requiring the drawing of decision trees.
Hi sir,
I watched uar lectures and understood how to draw decision tree . I even watched the Perfect value information lecturre also and i was able to OT question . But when coming to this Gym Bunnies I understood how to draw decision tree but iam not able to do the part b, please help me sir .If they have perfect information, then they will know the membership numbers before they have to decide which option to go for.
So if they are told that there would be 6,000 members then they would decide to choose option 1 because that would give the best return.
If they are told there would be 6,500 members then they would decide to choose option 2 because that would give the best return.Since we know the probabilities of being told 6,000 or 6,500, we can calculate the expected value with perfect information. It is more that the expected value calculated in part (a) and the most they will pay for the information is the difference between the two expected values.
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