Decision Analysis Case 1- |Baleston Research Proposal

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In the situation that Frank passes BSS1, but does not manage to pass BSS2, then this branch will count as if Frank only completed BSS1.

As such, we will have the following calculations of the Estimated Monetary Value.

1. No course. The probability to get the raise is 0.2, so the EMV = 0.2 *10,000 + 0.8 * 0 = 2,000

2. Takes Attosoft: The probability is calculated by multiplying the probability to get the raise in case of passing the course with the raise itself, adding the product of the probability of getting the raise and the raise in case the course is not passed, but decreasing the overall cost of the course.

EMV = 0.4*10,000 + 0.2*10,000-3,000 = 3,000

3. Takes BSS, module 1 With a similar mechanism as previously presented,

EMV = 0.6*10,000 + 0.2*10,000-5,000 = 3,000

4. Takes BSS modules 1 and 2 With a similar mechanism as previously presented,

EMV = 0.8 * 10,000 + 0.6* 10,000-7,000 (the sum of both courses) = 7,000

As we can see from the calculation of the EMV for all four options/branches, the best option is to take modules 1 and 2 of BSS, maximizing the overall value.

Case 4 - Sensitivity analysis

A.: Driving the car means that the total distance is 60 miles times the 3.50 hours, which is equal to 215 miles.

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This means that to the cost of driving there is an additional cost of 40.5 cents times 215 miles, which is equal to $87.075.

To the U.S. Airways flight, one needs to add the additional cost of the taxi ride, which is equal to $15.

1) only business travelers

Benefits

Transport

Speed

Cost

Utility

Costs

Weighted attributes

Amtrak

Acela Express

Airplane

Personal Car

2) only leisure travellers

Benefits

Transport

Speed

Cost

Utility

Costs

Weighted attributes

Amtrak

Acela Express

Airplane

Personal Car

B. The reason why more people are not choosing Acela is that Acela is in a niche market between Amtrak and traveling by plane to New York. It is trying to offer a faster service at a lower price than a flight ticket. However, this is not successful because of two different reasons. First of all, the targeted business persons will always choose to travel by plane, because the main factor of importance for them is the speed of the transport rather than its cost. On the other hand, the leisure traveler does not need to get to the location quickly and will always prefer to travel leisurely by car or take the Amtrak. For this type of traveler, the most important factor is not the speed with which he.....

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