A.23 Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department

\$12.99

A.23 Deborah Kellogg buys Breathalyzer test sets for the Winter Park Police Department. The quality of the test sets from her two suppliers is indicated in the following table:

For example, the probability of getting a batch of tests that are 1% defective from Winter Park Technology is .70. Because Kellogg orders 10,000 tests per order, this would mean that there is a .70 probability of getting 100 defective tests out of the 10,000 tests if Winter Park Technology is used to fill the order. A defective Breathalyzer test set can be repaired for \$0.50. Although the quality of the test sets of the second supplier, Dayton Enterprises, is lower, it will sell an order of 10,000 test sets for \$37 less than Winter Park.

a.     Develop a decision tree.

b.    Which supplier should Kellogg use?

A.24 Joseph Biggs owns his own ice cream truck and lives 30 miles from a Florida beach resort. The sale of his products is highly dependent on his location and on the weather. At the resort, his profit will be \$120 per day in fair weather, \$10 per day in bad weather. At home, his profit will be \$70 in fair weather and \$55 in bad weather. Assume that on any particular day, the weather service suggests a 40% chance of foul weather.

a.     Construct Joseph’s decision tree.

b.    What decision is recommended by the expected value criterion?