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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
The owner of the snow fun ski resort wants to decide how the resort should be run in the coming winter season.the resort's profits for this year's skiing season will depend on the amount of snowfall during the winter.on the resulting profit is summarized below.
more than 40inches.....probability=0.4.....profit= $120,000
20-40 inches.............probability=0.2........profit=$ 40,000
less than 20inches.....probability=0.4.....profit= -$40,000 (lost).
The owner has recently received an offer from a larger hotel chain to operate the resort for the winter,guaranteeing a $45,000 profit for the season.the owner is also considering leasing snowmaking equipment for the season.if equipment is lease,the resort will be able to operate full time,regardless of the amount of natural snowfall.if the owner decides to use snowmakers to supplement the natural snowfall,the profit for the season will be $120,000 minus the cost of leasing and operating the snowmaking equipment.the leasing cost will be about $12,000 per season,regardless of how much its used.the operating cost will be $10,000 if the natural snowfall is more than 40inches,$50,000 if it is between 20 and 40 inches, and $90,000 if its less than 20 inches.
draw the decision tree and conclude the owners decision by your calculation.
simon.
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