Decision Tree | Decision Theory | Part-2 [Lec 8]

Описание: This is the part 2 of Decsion Tree,
Two Difficult questions are solved in this video which clear your concept of decision tree.
In this video also you will learn Decision Tree, one of the important topics of Decision Theory. Decision Tree is graphical representation of a decision process involving at multiple stages. Calculation of EMV from Decision Tree is also explained in detail.

#1 Question
Acts Events(State of Nature)
E1 E2 E3
A1 20 30 50
A2 40 45 30
A3 25 26 28
A4 30 25 35
Pr 0.3 0.5 0.2

#2 Question
A firm has developed a new product X, they can either test market or abandon market the project. The details are out below,
Test market cost 50,000, likely outcomes are favourable(P=0.7) or failure (P=0.3). If favourable they could either abandon or produce it when demand anticipated to be
Low P=0.25 Profit= 1,00,000
Medium P=0.6 Profit= 1,50,000
High P=0.15 Profit= 4,50,000
If the test market indicates failure the project would be abandoned. Abandonment at any stage results in a gain of 30,000 from machinery used.

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