WGU C207 Task 2 Decision Tree Analysis | Latest Update
with Complete Solution.
WGU C207 Task 2: Decision Tree Analysis
Student: David J. Hairston
University: Western Governors University
A. Describe a business question that could be answered by applying decision tree analysis, based on the
scenario provided in the attached “Decision Tree Analysis Resources.”
What is the optimal business decision using probabilities, payoffs, and expected values (EVs) for three
alternatives? Considering the data regarding a new competing drug release, MPC must remain competitive
in the market. To achieve this, should MPC:
1. Create an additional new drug,
2. Exploit the current drug it already has on the market, or
3. Make no changes to its current drug and process?
B.
Identify the relevant data values required for your decision tree analysis,
includi ng the following:
• probabilities
• payoffs
• profits
• demand
When identifying the relevant data values, first would be the Probabilities
included in t he favorable market 69%, next would be with exploited current
drug 61% and finally, you have no changes 77%. The unfavorable market
probabilities are 31% for the ne w drug, 39% for the exploited current
drug, and 23% for..no changes.
When identifying the relevant data values in Payoffs. They are calculated by the
de
, mand for units and the percentage rate per market. The payoff for creating
a new dru g is $2,686.45 for the favorable market, and for the unfavorable
market, it is $880.75. Next, for exploiting the current drug, the payoff is
$4,294.29 in the favorable market a nd
$1471.47 in the unfavorable market. Making no changes for MPC, the payoffs are
$571.59 in the favorable market and $224.46 in the unfavorable market.
When identifying the relevant data values in Profits, the first is $2,116.68 in
the new d rug, next..is $3,193.38 in the exploited current drug, and
$491.74 with no changes.
When identifying the relevant data values in the Demand, the new drug
has 4133 un its in the favorable market and 1355 units in the unfavorable
market. The exploited c urrent drug has 5577 units in the favorable market
and 1911 units in the unfavorable market. Finally, regarding the demand
for no change, you have 657 units in the fav orable market and 258 units
in the unfavorable market.
B. Report how you analyzed the data using decision tree analysis by
doing t he following:
1. Complete a decision tree diagram, including each of..the following:
• state-of-nature nodes
• calculated payoffs, each expressed out to two decimal places
• expected values, each expressed out..to two decimal places
Note: You can submit the completed decision tree diagram using a separa
te attachment..or..the optional..template on the attached “Decision Tree Ana
lysis Resources.”
Note: Refer to “Prepare for..the Performance Assessment Task 2” in the course
of..study to see examples of..acceptable output.
with Complete Solution.
WGU C207 Task 2: Decision Tree Analysis
Student: David J. Hairston
University: Western Governors University
A. Describe a business question that could be answered by applying decision tree analysis, based on the
scenario provided in the attached “Decision Tree Analysis Resources.”
What is the optimal business decision using probabilities, payoffs, and expected values (EVs) for three
alternatives? Considering the data regarding a new competing drug release, MPC must remain competitive
in the market. To achieve this, should MPC:
1. Create an additional new drug,
2. Exploit the current drug it already has on the market, or
3. Make no changes to its current drug and process?
B.
Identify the relevant data values required for your decision tree analysis,
includi ng the following:
• probabilities
• payoffs
• profits
• demand
When identifying the relevant data values, first would be the Probabilities
included in t he favorable market 69%, next would be with exploited current
drug 61% and finally, you have no changes 77%. The unfavorable market
probabilities are 31% for the ne w drug, 39% for the exploited current
drug, and 23% for..no changes.
When identifying the relevant data values in Payoffs. They are calculated by the
de
, mand for units and the percentage rate per market. The payoff for creating
a new dru g is $2,686.45 for the favorable market, and for the unfavorable
market, it is $880.75. Next, for exploiting the current drug, the payoff is
$4,294.29 in the favorable market a nd
$1471.47 in the unfavorable market. Making no changes for MPC, the payoffs are
$571.59 in the favorable market and $224.46 in the unfavorable market.
When identifying the relevant data values in Profits, the first is $2,116.68 in
the new d rug, next..is $3,193.38 in the exploited current drug, and
$491.74 with no changes.
When identifying the relevant data values in the Demand, the new drug
has 4133 un its in the favorable market and 1355 units in the unfavorable
market. The exploited c urrent drug has 5577 units in the favorable market
and 1911 units in the unfavorable market. Finally, regarding the demand
for no change, you have 657 units in the fav orable market and 258 units
in the unfavorable market.
B. Report how you analyzed the data using decision tree analysis by
doing t he following:
1. Complete a decision tree diagram, including each of..the following:
• state-of-nature nodes
• calculated payoffs, each expressed out to two decimal places
• expected values, each expressed out..to two decimal places
Note: You can submit the completed decision tree diagram using a separa
te attachment..or..the optional..template on the attached “Decision Tree Ana
lysis Resources.”
Note: Refer to “Prepare for..the Performance Assessment Task 2” in the course
of..study to see examples of..acceptable output.
