Question

Tenfour Goodbuddy is an independent trucker whose truck is empty after his most recent haul. He has found a deal to take a load to Birmingham, with a return load included, for a total of $3000 Another deal would give him a load to Charlotte for $2500. Tenfour thinks there's a 50-50 chance of finding a $2500 return load from Charlotte. Otherwise he must return empty, with no revenue Assume that the cost of a round trip to either city is the same. Sometimes in the past he has called the Thunder Road Truck Stop (TRTS) in Charlotte to get information for a cost of $10 for the call 90% of the time when he had ended up with a return load, TRTS had told him "It's busy"" 80% of the time when he had ended up with no return load TRTS had said "It's slow". Below it's the decision tree that represents this scenario 4. 3000 Birming S5000 RL 8182 Bus Charlotte $2500 0.45 S3000 Call Slow Birming S5000 Charlotte 89* NL $2500 $3000 ca Birming RL $5000 0.5 Charlotte NL $2500

a. Identify the decision strategies for this case.

b. Select 2 decision strategies and construct the risk profiles for each one.

Answer 1

the numbers on the circle of the graph are the expected earnings of the scenario and the numbers on the squares are the maximum of the expected earnings and the expected earning of the either cases.