#### Transcript Exercise 1: Find and Circle all Problems With This

```Exercise 1: Find and Circle all Problems
With This Decision Tree
EMV for node 1
= \$10,000
= (.5)(\$200,000) + (.5)(-\$50,000)
Payoffs
Favorable market (.60)
1
Favorable market (0.5)
Favorable market (0.3)
Construct
small plant
2
EMV for node 2
= \$40,000
Figure A.2
Unfavorable market ( -0.5)
\$80,000
-\$50,000
\$40,000
-\$10,000
= (0.3)(-\$10,000) + (0.7)(\$40,000)
\$0
Exercise 2: Find the EMVs for all
options of the Decision Tree
Favorable market (.60)
1
Unfavorable market
Favorable market (.60)
2
Unfavorable market
Favorable market (0.6)
Construct
small plant
Figure A.2
3
Unfavorable market
\$140,000
-\$70,000
\$100,000
-\$50,000
\$60,000
-\$10,000
\$0
Exercise 3: Transform the Qualitative
Scores into Quantitative and Determine
the Better Candidate
Employee A
Employee A
Employee B
Employee B
Weight
(W)
Score
(S1 )
W x S1
Score
(S2 )
W x S2
Language
0.10
Very Good
Excellent
Analytical
0.15
Very Good
Excellent
Technical
0.20
Fair
Very Good
Work Exp.
0.15
Very Good
Good
GPA
0.20
Very Good
Very Good
People skills
0.20
Good
Fair
TOTAL
1.0
```