Draw the influence diagram that corresponds to the decision tree for Exercise 12.4. How would this...

Question

Draw the influence diagram that corresponds to the decision tree for Exercise 12.4. How would this influence diagram be changed in order to answer parts a, b, and c in Exercise 12.4?

Exercise 12.4

For the decision tree in Figure 12.13, assume Chance Events E and F are independent.

a. Draw the appropriate decision tree and calculate the EVPI for Chance Event E only.

b. Draw the appropriate decision tree and calculate the EVPI for Chance Event F only.

c. Draw the appropriate decision tree and calculate the EVPI for both Chance Events E and F: that is, perfect information for both E and F is available before a decision is made

David · Accepted Answer

a)
EVPI = 0.1*20 + 0.2*10 + 0.6*0 + 0.1*-10 = 3 
b)
EVPI = 0.7*5 + 0.3*-1 = 3.2 
c) In case of both E&F:
F should be chosen as EVPI is higher than that of E

Draw the influence diagram that corresponds to the decision tree for Exercise 12.4. How would this influence diagram be changed in order to answer parts a, b, and c in Exercise 12.4? Exercise 12.4 For...

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