- This topic has 9 replies, 2 voices, and was last updated 1 year ago by
.
- Posts
Hi,
This question is about decision tree
The question is asking the expected value but because at point B the shape is rectangle so we have to make a decision so the answer is we should choose the best option of the expected value which is 506000
am I correct ?
so we should look to the type of decision not only adding the expected value
Because from the question you may understand that you should add up all the possible outcomes
but because of the rectangle shape the question is pointing to which is B we should take decision.am I correct.
Thanks
Hi,
But at point B there is a decision so not only calculating the EV we have take the decision between the outsourcing and the investment which will be more worthful to make at 506000 profit .
So It doesn’t mean that we have only to calculate the EV and finish.
I Have seen in some different questions not in Decision tree that the they require only the expected value.
is that ok,
Thanks,
I am sorry if I wasn’t clear enough
The expected value approach involves choosing the option that gives the highest expected value.
If the expected value at point B is 506,000 and it is the highest among the options, then you should choose the option with the expected value of 506,000.
Bpp 2020-21 exam kit Chair co Q24
Hi ,
Coming back to this question
For the chair company it was asked for the expected contribution and here their is no choice only the total expected contribution
So here we don’t have to choose what is the best just the total contribution.
what you think is the reason?
Thanks,
The focus is on calculating the total expected contribution rather than choosing the best option. This is because the question is designed to assess your ability to compute the overall contribution based on given data, rather than making a decision between different alternatives.
The total expected contribution is a straightforward calculation that involves summing up the contributions from all relevant products or activities, without the need for a decision-making process.
- You must be logged in to reply to this topic.