you are a maintenance engineer for a plant that manufactures electronic goods. You are just about to leave on your vacation for two weeks, and your boss is somehow concerned about certain machines that are unreliable, requiring your expertise to keep them working. During your vacation, your boss has a decision to make. He either can close the part in the plant involving the machines in question, at a cost of $10,000, or he can leave that part up and running. Of course, if there are no machine failures, there is no cost. If there is only one failure, he can work with the remaining machines until you return. Hence the cost is effectively zero. However, if there are two or more failures, the productivity will be lost and he will have to call in experts to repair the machines immediately. The cost would be $25,000. you are a maintenance engineer for a plant that manufactures electronic goods. You are just about to leave on your vacation for two weeks, and your boss is somehow concerned about certain machines that are unreliable, requiring your expertise to keep them working. During your vacation, your boss has a decision to make. He either can close the part in the plant involving the machines in question, at a cost of $10,000, or he can leave that part up and running. Of course, if there are no machine failures, there is no cost. If there is only one failure, he can work with the remaining machines until you return. Hence the cost is effectively zero. However, if there are two or more failures, the productivity will be lost and he will have to call in experts to repair the machines immediately. The cost would be $25,000.
a. Draw a decision tree and represent the problem?
b. If the owner believes that the chance of having two or more failures is p. determine the maximum value of p such that the option of keep up and running is better than close option.
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