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7/26/2019 Mini Assignment 2 2
http://slidepdf.com/reader/full/mini-assignment-2-2 1/1
MINI-ASSIGNMENT 2
I am going to fly to San Francisco on December 8 th and return home on December11th. My travel agent tells me that I could buy a one-way ticket today to San
Francisco for $350 or a round-trip ticket for $660. If I wait until December 1
st
to buy, a one-way ticket will cost $370 to San Francisco and a round-trip ticket willcost $730. It is possible that before December 1
st, my aunt (who works for the
airline) will be able to obtain a free one-way ticket for me back home. If she cannotget the ticket for free, the one-way ticket will cost $370. The probability that myaunt will obtain the free ticket is 0.3. If I bought a round-trip ticket today and myaunt has obtained a free ticket, I may return “half” of my round-trip to the airline.In this case, my total cost will be $330 plus a $50 penalty.
a) Draw a decision tree for this problem. You can use the draw tools in MS Word
or you can draw it neatly by hand.
b) Use the tree from part a) to determine my best course of action. What should Ido and when? What is the expected cost of my obtaining round-triptransportation to San Francisco?