Question

14. After contemplating the caseload question (see the previous problem), the director of social ser- vices has decided that reasonable caseload probabilities are 10 for moderate. 30 for high, and.60 for very high. a. Which alternative will yield the minimum expected cost? b. Construct a decision tree for this problem. Indicate the expected costs for the three decision branches c. Determine the expected value of perfect information using an opportunity loss tahle

Answer 1

angwert minimum (a) The objective ig to find out which alternative will yield Cost this can be determined by Calaleeting eupeeted cost. The expected cost for alternative is calculated as belave $ $74 $60 Re-assign : 0.10(50) + 0-30C60) + 0.60(85) New staff: 0.10 (60) +0.30 (60) + 0.60(60) Redesign : 0.10(40) +0.30 (50) +0-60 (90) = $73 Analysis 1 from the above calculations, it is evident that the new staff alternative has the yielded minimum eupeeted cost. is 50 60 (94 U2 Modencete 60 60 40 50 (73 (L) The decision tree .10 Moderate Reassign 30 High Go very high 85 New staff 60 (60) :30 high :60 very high. 60 10 Moderate Redesign .30 High •60 very high 90 The expected cost for altemctive is calculated below Re-assign : 0.10(50) +0-30C60) +0.60 (85)= $74 New staff: 0.10 (60) + 0.30 (60) + 0.60(60) = $60 Re-design: 010 (40) +0.30 (50)+0.60(90) $73

(C) The Opportunity loss table is as shown belowe Moderate high very high Erpeeted value 25 19 Jo 10 Re-assign 0 5 20 ID New sleut 30 18 0 o Re-design Oil 0.3 6.6 At an expected cost of $60, the director should hire and troon two additional staff members. plz do like, I hope you get the answer.